Tips for Planning Out Your Child’s Higher Education without Taking a Personal Loan

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Every parent wants their child to live out their dreams and be successful in everything they do in life. Plan to pay for all of your child’s dreams, but also make sure that if something happens and you can’t be there, your child’s money is safe.

And since many parents think that getting a loan at low personal loan interest rates will help them, they forget the hefty rates and costs attached to l&t finance personal loan.

Let’s talk about how parents can plan for their kids’ future and higher education expenses.

How to invest in your child’s future in the best way

First of all, don’t worry about all the choices you have to make. Sit and take it to step by step. Look at your current financial situation and the time left until your child goes to college and gets married. Since parents have to put money into child plans on a regular basis, it is important to plan your finances well before choosing a child plan.

Second, you need to estimate how much money your child’s future goals will cost, which is called the “corpus.” This gives you an idea of how much of an l&t finance personal loan you may need. Make sure you take inflation costs into account when figuring out the corpus amount. Estimate the amount of money your child will need for college based on their possible careers and how much they will cost.

The next step would be to choose the right type of investment that would help the parents save up enough money and fit their budget and willingness to take risks. When you start investing early, you give your money more time to grow, which means it will give you a better return. Your portfolio is mostly made up of the investments you choose. Parents who don’t like taking risks would rather invest in things like traditional child insurance plans, fixed deposits, etc., which offer guaranteed returns with the least amount of risk.

While parents who are willing to take risks for higher returns may choose to invest in things like SIPs through equity mutual funds, parents need to figure out how much money they have and plan for their child’s future based on that. Make sure you know if you will need a loan at low and attractive personal loan interest rates to pay for the amount or not.

And keep in mind that if you start investing early, you will usually need to pay a lower premium or invest a lower amount through SIP to build up the desired corpus by the time the child needs it.

Parents should also get term insurance to make sure their child’s future is safe even if they can’t be there or if they can’t get l&t finance personal loan when they need one. Term insurance provides a guaranteed amount for your family when you’re not there. By choosing a good amount, you can make sure that your child’s financial needs will be met even if you die. You can also use the assured amount from the term insurance policy to keep investing for his or her future.

Where to invest?

Mutual funds- Investing in mutual funds is one of the best ways to strengthen your finances and be ready for a child’s financial help, even if you can’t get a personal loan at the lowest personal loan interest rates or even if your personal loan isn’t accepted.

Mutual funds have become the most popular way for parents to invest because they offer a wide range of asset classes and categories to invest in, as well as investment options for different time horizons that meet the needs of every type of investor. Investing in equity mutual funds is usually the best way to save for long-term goals like your child’s college education or wedding since stocks have always shown to give higher returns over time and beat inflation costs easily.

ULIPs and plans to cover children – While you’re worrying about whether or not to get an l&t finance personal loan to meet your financial needs, don’t forget how important ULIPs are.

ULIPs combine insurance and investments into one plan for the policyholder. Part of the premium paid by the policyholder goes toward investing in debt, stocks, etc., depending on the policyholder’s risk profile. The rest of the premium goes toward covering the policyholder. Here, the risk is on the policyholder, and the amount to be invested depends on how much money the policyholder has and how convenient it is for them.

Traditional plans for child insurance involve the company investing the money according to its own rules. The premiums paid to go into a common fund, so the policyholder can’t keep track of his or her own portfolio.

Traditional child plans aren’t as good as ULIPs for a number of reasons, but the main ones are that ULIPs have more growth potential, are easier to understand, let you switch between funds, etc. Traditional child plans are good for people who don’t want to take any risks and would rather have guaranteed returns.

Fixed deposits and debt funds: If your child will be going to college in the next one to two years and you already have a home loan or other loans and don’t want to take out an l&t finance personal loan or are afraid it will be turned down, it’s best to invest in short- or medium-term investments like fixed deposits and debt funds. Fixed deposits have low risk and are currently paying up to 7% p.a. in interest, while debt mutual funds have moderate risk and have been giving short-term returns of around 7% in recent years (1-2 years). Also, for those who don’t have access to low personal loan interest rates due to poor credit profiles, sticking to FDs and debt funds in a disciplined manner can help accumulate the target corpus over the long term.

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