We are living in a century where inflation is continuously increasing and we have to generate a certain level of return on our investment to beat the inflation in coming years. As we all know the expense of higher education is rapidly increasing day by day and a huge amount will be required after 16 years to fund the higher education of the children.
Today, we will discuss the possible types of investment and their return that can fund higher education for your 2 year old child at the age of eighteen.
Type of Investment and their return
PPF (Public Provident Fund)
-This is the traditional and safest type of investment.
-Current rate of Interest is 7.10% annually.
-Open a PPF account in the name of your child and invest regularly.
– You can also claim an income tax rebate on the invested amount.
-The lock-in period is 15 years and you will be able to withdraw a handsome corpus on the eighteenth birthday of your child.
-if you invest 2000 monthly in PPF then you will invest Rs.3,60,000.00 and you will get Rs.6,50,913.00 after 15 years of maturity as per the current ROI.
2. Mutual Funds
-This is the type of investing which can give you easily 12% to 14% return on your invested amount.
-if you invest 2000 monthly in Mutual Fund then you will invest Rs.3,60,000.00 and you will get Rs.10,09,152.00 after 15 years of maturity assuming a 12% rate of return.
-This is the type of investing that can grow multiple folds with certain risks.
-if you invest in blue-chip stocks regularly you can generate a handsome corpus with a 20% return on your investment.
– You can open a Demat account and start purchasing equity shares of top companies at regular intervals.
-Remember, you are investing in equities for a corpus required after 15 years so only long-term investing is the key to getting up to 20% return on your investment.
– If you invest 2000 monthly in Mutual Fund then you will invest Rs.3,60,000.00 and you will get Rs.22,68,590.00 after 15 years of maturity assuming a 20% rate of return.
The total amount invested per month up to 15 Years = Rs.6,000.00
The total amount invested in 15 Years=Rs.10,80,000.00
The total amount of expected corpus after 15 Years=Rs.39,28,655.00
Diversification of investment is essential to avoid any unforeseen circumstances in any sector.
We wish you a great future for your child. All the Best.
If you have any questions related to finance, kindly leave a comment.
The Child Investor