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SAving for your child..

Discussion in 'Money Matters' started by Shanvy, Oct 23, 2007.

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May 4, 2010 #21

baby1 Bronze IL'ite

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Re: Save for Kid's Education

Dear shanvy madam,
i am a housewife and have a four year old son. i am 31 now. and i want to start saving for my son's education. i and my husband both don't have any knowledge regarding the savings and investment plans. could you pls help us how to start with? whatever i have at the end of the month i will consider it as a saving for the month and that way i want to go for some good investment plans for my son or for us in future. pls help by giving your most valuable suggestions. also if possible pl mail to: s underscore baby65atyahoodotcom.thanks in advance.

baby1, May 4, 2010

baby1, May 4, 2010

#21
May 20, 2010 #22

shaishav Silver IL'ite

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Re: Save for Kid's Education

sukhanya said: ↑

i've a 1 1/2 yrs old boy... when i was thinking abt savings for my son, i came to know a LIC policy named Jeevan Tarang.. This is actually a Whole Life Plan... when u invest 60k yearly for 10 or 15yrs, u will get a lumpsum amount after 10 or 15yrs... u can use that lumpsum money for kid's education... also from 15th year, till we die, we'll get yearly 60k... this will act as pension... mostly gals prefer this policy... i'm planning to go for this scheme... wat do u people say? any suggestions are welcome...
Click to expand...

The whole life plan is the worst plan you can opt to invest your hard earned money. The guy selling this will get handsome commission on the 60k you'll invest. Try asking him to share his commission with you and he'll agree and you'll also know that he is actually bribing you to buy the plan.

My suggestion will be to keep it simple and invest in diversified equity mutual funds with 8-10 years track record and also buy a term insurance which gives cover for atleast 30 years or age till 60

Let me know if you need figures to work on...I can help

Last edited: May 20, 2010

shaishav, May 20, 2010

shaishav, May 20, 2010

#22
May 21, 2010 #23

shaishav Silver IL'ite

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Planning for Kid's Education

Hi,

Anyone thinking of planning for their kid's education can post all their concerns like where to invest, how much to invest etc etc here.

Regards,

Shaishav

shaishav, May 21, 2010

shaishav, May 21, 2010

#23
May 21, 2010 #24

shaishav Silver IL'ite

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Planning for Kid's Education

Hi,

Anyone thinking of planning for their kid's education can post all their concerns like where to invest, how much to invest etc etc here.

Regards,

Shaishav

shaishav, May 21, 2010

shaishav, May 21, 2010

#24
May 30, 2010 #25

kashly New IL'ite

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Re: Planning for Kid's Education

Hi Shaishav,

thanks for starting this thread. I have a daughter who is 3 years old. I would like to know where to invest to ensure her a good higher education. Is there any plan specially for this educational needs? Since I do not have any idea on this, please let me know if you want some more details from me.

Kavitha

kashly, May 30, 2010

kashly, May 30, 2010

#25
May 31, 2010 #26
shaishav Silver IL'ite

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Re: Planning for Kid's Education

kashly said: ↑

Hi Shaishav,

thanks for starting this thread. I have a daughter who is 3 years old. I would like to know where to invest to ensure her a good higher education. Is there any plan specially for this educational needs? Since I do not have any idea on this, please let me know if you want some more details from me.

Kavitha
Click to expand...

Hi Kavitha,

I need the following details from you:

Age of Child - 3 years (your daughter's age)

Lumpsum required for education at today's cost - (10L to 50L depending on course)

Age of child when need comes due - (17 for UG & 20-21 for PG)

Anticipated rate of Inflation - (8-10% in education sector)

Please send me your estimates. I have given you my estimates which can be used to arrive at a figure for calculation.

Regards,

Shaishav
shaishav, May 31, 2010

shaishav, May 31, 2010

#26
Jun 2, 2010 #27
kashly New IL'ite

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Re: Planning for Kid's Education

shaishav said: ↑

Hi Kavitha,

I need the following details from you:

Age of Child - 3 years (your daughter's age)

Lumpsum required for education at today's cost - (10L to 50L depending on course)

Age of child when need comes due - (17 for UG & 20-21 for PG)

Anticipated rate of Inflation - (8-10% in education sector)

Please send me your estimates. I have given you my estimates which can be used to arrive at a figure for calculation.

Regards,

Shaishav
Click to expand...

Shaishav,

Thanks for your favourable reply.

These are my estimations :

1. Age of child - 3 years
2. Lumpsum required for education at today's cost - 50 lakhs
3. Age of child when need comes due - 17 years
4. Anticipated rate of Inflation - 10%

Thanks,
Kavitha
kashly, Jun 2, 2010

kashly, Jun 2, 2010

#27
Jun 2, 2010 #28
shaishav Silver IL'ite

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Re: Planning for Kid's Education

kashly said: ↑

Shaishav,

Thanks for your favourable reply.

These are my estimations :

1. Age of child - 3 years
2. Lumpsum required for education at today's cost - 50 lakhs
3. Age of child when need comes due - 17 years
4. Anticipated rate of Inflation - 10%

Thanks,
Kavitha
Click to expand...

Hi Kavitha,

Following is your requirement:

50 Lakhs at todays cost in 14 years will grow to 1.9 Crores @ 10% inflation. So, your goal is accumulating 1.9 crores in next 14 years.

Following is the investment required to achieve your goal:

INR 23,000 per month in diversified equity mutual funds for 14 years. The expected rate of return is 15% per annum.

The following is not considered:

Amount already provided.

Any lumpsum amount which can be invested immediately( 1 Lakh invested today can grow to 10 Lakh in 17 years@15% returns which will reduce your monthly investment requirement by 2000)

The amount of investment will increase according to the increase in income.

The child can actually go for a career which will not cost you this much and you can save money and divert the same towards your kid's marriage.

You also need a life cover of 30 Lakh to secure your kid's education in case of a death of the earning member. You can buy two policies and later when your goal is achieved and you need to reduce the cover you can discontinue with one of the policy.

Are you left with that much of surplus amount every month?

Regards,

Shaishav
Last edited: Jun 2, 2010

shaishav, Jun 2, 2010

shaishav, Jun 2, 2010

#28
Jun 3, 2010 #29
kashly New IL'ite

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Re: Planning for Kid's Education

shaishav said: ↑

Hi Kavitha,

Following is your requirement:

Click to expand...

Hi Shaishav,

thanks for your reply. I have following quesitons:

1. What do you mean by diversified equity mutual funds ? Give me examples. What is the risk an uncertainities involved in these investments?
2. By life cover, do you mean by life insurance policy like LICs? What is the basis for that limit of 30 lakhs? i did not understand the plan of having 2 policies too. If you don't mind, please explain me in detail.

thanks,
kavitha
Last edited by a moderator: Jun 3, 2010

kashly, Jun 3, 2010

kashly, Jun 3, 2010

#29
Jun 3, 2010 #30

shaishav Silver IL'ite

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Re: Planning for Kid's Education

kashly said: ↑

Hi Shaishav,

thanks for your reply. I have following quesitons:

1. What do you mean by diversified equity mutual funds ? Give me examples. What is the risk an uncertainities involved in these investments?
2. By life cover, do you mean by life insurance policy like LICs? What is the basis for that limit of 30 lakhs? i did not understand the plan of having 2 policies too. If you don't mind, please explain me in detail.

thanks,
kavitha
Click to expand...

<link rel="File-List" href="file:///C:%5CDOCUME%7E1%5CADMINI%7E1%5CLOCALS%7E1%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link rel="themeData" href="file:///C:%5CDOCUME%7E1%5CADMINI%7E1%5CLOCALS%7E1%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" href="file:///C:%5CDOCUME%7E1%5CADMINI%7E1%5CLOCALS%7E1%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><style>  </style> Hi Kavitha,
Definition taken from Wikipedia - A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals)

The one I have suggested you is a diversified equity mutual fund. This category of fund invests majorly in equity but is not restricted to one sector i.e. they invest in banking, oil and gas, pharmaceutical etc. The advantage of diversification is that your money will not be at huge risk as you are not putting all your eggs in one basket.

For Example, HDFC Equity Mutual fund is a diversified equity mutual fund which manages INR 6000 crores from lakhs of investors. This fund was launched in 1994 and till date has gives 22% annual returns since inception.
The only risk in investing your money in such funds is (that too in short term) that the performance will be according to the performance of the stock market. If the market goes down the value of your investment will also come down. The chance of your money going negative is zero if you are invested for a period of 7 years and more. I have suggested you to invest every month which brings down the risk as you will invest when the market is up and also when the market is down.

Yes, by life cover I mean an insurance policy which should cover the life of the earning member of the family in case of an untimely death. The logic behind the 30 Lakh cover is that life is uncertain and god forbid if the earning member is a victim of early death your child will not be able to get the education you want him to get. But, if he has a life cover then in case of his untimely death you will get 30 Lakh from the insurance company which can be invested in a suitable option and will grow to cover your kids education expenses.

Now, about the two policies I suggested. Suppose you take two policies of 15 Lakh each which will cover you till age 60 and after 18 years when you kid finishes his education and you feel that you need to reduce the life cover you can cancel one policy and continue with the other one. The idea here is again of not putting all your eggs in one basket.

I hope I have explained to your satisfaction. Let me know if you have more questions.

Regards,

Shaishav

Last edited: Jun 3, 2010

shaishav, Jun 3, 2010

shaishav, Jun 3, 2010

#30

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