By Amit Gupta
We are living in a world that is driven by volatility, uncertainty, complexity and ambiguity. Keeping that in mind, make sure to be flexible when planning and investing for your child’s education expenses.
Education can be expensive, especially if your child is planning to join a foreign college or university for higher education. Planning well in advance and keeping room for uncertainty is a good way to go.
Here’s how to best plan for your children’s higher education in an uncertain world like ours.
Education goals
You do not have to be exactly right or choose the exact career path your children will take right now. But, you need to have an idea of it and should plan accordingly. The best way to go about it is to plan for the most expensive education goal that your children have the highest chance of choosing. For instance, your child might want to become a doctor in the future, so you should enquire about how much the education will cost at that time and plan your investments accordingly.
Moreover, you should reassess your education goals and financial planning at least once every year to make sure that you are on the right track to achieving the goal.
Diversify your investment
This needs to be said as many times as possible. Make sure that your investment portfolio, including your education investment, is well-diversified across different asset classes, including foreign assets if possible. This will not only help mitigate the volatility risk of markets but also ensure that your money grows in multiple ways.
The cost of education is only going to increase with time, especially if you want admission to one of the prestigious international universities. So, you have to prepare for the worst and invest accordingly.
In addition to keeping your investments diversified, you might also want to take action to limit risks so as to not lose everything in case of unpredictable events such as the Covid-19 pandemic.
Keep a backup plan
You may have invested substantially for your child’s higher education, but you should still have a backup plan ready. For example, your investments may be stuck in a rut when you want/need to redeem them and you may have to look for alternatives such as an education loan, while you wait for the market to recover. Having a Plan B, like investing in some safer options such as government schemes and FDs when diversifying your folio can be a saviour in tough times.
You should be prepared for the maximum predictable goals when it comes to your child’s education. Keep topping up systematic investment plans and invest as much as possible to prepare your finances for uncertainties.
College Costs
- Plan for the most expensive education goal to avoid surprises
- Take action to limit risks so as to not lose everything in case of unpredictable events
- Diversify education investment portfolio across asset classes
(Disclaimer: The writer is MD, SAG Infotech. Views expressed are personal.)