By Ashish Fernando

The downward spiral of the Indian rupee against the US dollar has impacted the financial planning of study-abroad aspirants. It has sent students and their parents scrambling to meet the deficit created in the coffer. For those already studying abroad, the current depreciation of INR against the US dollar only leaves room for crisis management.

However, for parents planning for their children’s overseas education, the current economic conditions should help define a corpus that factors in not just tuition fees, travel expenses, and cost of living but calculates beyond the conventional determiners and factors in exchange rate fluctuations that could entail a revision of investment plans.

Currency fluctuations are a significant risk and must be factored into when funding overseas education. The Indian rupee has traditionally taken a plunge against the US dollar. To prepare for exchange rate fluctuations, diversifying the investment portfolio and owning assets in dollar value can be a great way to be future-ready. Making long-term investments in US ETFs / stocks help parents manage currency risk. However, developing a thorough grasp of its advantages and disadvantages is crucial before investing your money in US ETFs/stocks.

Also Read: INR crosses 81! Rupee depreciation against the dollar works in favour of these investors

US stock market investments can fund your kid’s foreign education – Here’s how

Pros

  1. ETFs/Stocks tend to provide good returns of approximately 10-15% over a 3-year period.
  2. There are now platforms available in India that facilitate investments in US stocks/ETFs.
  3. Easy liquidity allows you to exit anytime. No lock-in period.
  4. US-based ETFs are slightly less volatile vs. India and other countries.

Cons

  1. ETFs and stocks have high volatility. Putting money in them will put you at risk with the concerns regarding approaching recession.
  2. ETFs and stocks are long-term investments for optimum returns.
  3. Expert insights are needed to select the investment type.
  4. Tax compliances might make it expensive.

Thus, understanding the benefits and drawbacks of ETFs can help parents navigate the risks and benefits of investing in ETFs and determine whether doing so will benefit their portfolios.

Also Read: US stock market investments can fund your kid’s foreign education – Here’s how

(Author is Founder, iSchoolConnect)