Education costs across the world are soaring at an alarming rate. Be it secondary education, higher secondary or a professional degree, the cost of education is at an all-time.
To give an example, the price of education in pre-schools and nursery in metropolitan cities is around Rs.1-1.5 lakh. This cost could rise further in the years to come.
Given spiralling inflation prices, it is imperative to save for your child’s future early on. Saving requires disciplined financial planning and knowing where to invest in supporting your financial goals.
In this article, we look at the reasons for the sharp rise in education costs and how you can invest for education systematically.
Why are education costs on the rise?
The primary reason for the cause of high education costs is education loans. Such loans have become increasingly accessible to students. Moreover, the discounted pricing is aimed at luring more number of students which ultimately has a cascading impact on the education costs worldwide.
In India, there is a need for an increase in the proportion of government spending on education. The supply and demand mismatch for quality education is driving up education costs. Besides, private institutions are filling this gap by introducing incentivised courses with affordable fee structures. Thus, boosting their profits at the cost of moving up the education expenses.
The second reason is the shortage of seats in Indian colleges affiliated to government universities that have high cut off marks. This makes it difficult for most students to get in, in which case they either resort to private institutions or consider going abroad.
How to start saving to counter rising education costs?
Mutual fund investment is a market-linked investment avenue that can offer significant returns compared to fixed deposits or savings account. With the power of compounding, you can amass a substantial amount if you stay invested for the long run.
Most experts recommend investing via Systematic Investment Plans (SIPs) to reap the maximum benefits of mutual funds. This is because SIPs permits small amounts at fixed intervals without straining your budget. At the same time, SIPs also get you into a regular habit of saving irrespective of market fluctuations.
To start investing in mutual funds, you can set up a SIP for as low as Rs.500. Remember to choose the right mutual fund scheme that aligns with your investment goals, investment horizon and risk appetite.
It is a wise idea to start planning for your child’s education as early as possible. If they wish to study abroad, it can help to plan before-hand given the exorbitant expenses involved in foreign education. You can invest in mutual funds for a long-term horizon and create wealth over the years to support your child’s future.