Calculate & Invest for your Kids Higher Education in India – Download Excel Tool
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Introduction :
As parents in India, one of the biggest dreams we wish for is to provide the best education for our children. Yet, the rising cost of education often feels like a mountain too steep to climb.
Did you know that In a private engineering college, tuition alone could cost upwards of ₹10 lakhs today, and when adjusted for inflation for 15years, it might well touch ₹50 lakhs by the time your child enters college?
Yes, that’s a staggering number, but the good news is that with smart financial planning, it’s an achievable goal.
India’s education inflation rate is a staggering 10-12% annually, much higher than the general inflation rate (7%).
Why It Matters: Without proper planning, you might have to rely on loans, which can burden both you and your child with debt right at the beginning of their career.
At the end, we will see an example calculation of one of the reader’s requirement.
1. Estimate Your Goal Value
Use the attached financial calculator to estimate the future cost of your child’s education, factoring in inflation.
- Current Cost of Education your child wish : Based on your Choice of Eduction
- Inflation rate to consider for education : 11%
- Years from Today : X (18 – Child Age)
- Future Cost : Y
Use this online calculator below to estimate : →
Inflation → https://www.1stopinvestment.com/calculator/inflation-calculator/
2. Calculate the Investment SIP requirement :
- What is the Savings required per month required : To Achieve Rs.Y in X years @ R %
- Return expected during this savings period → R% (Based on risk Profile)
Use this online SIP calculator below to calculate: → SIP → https://www.1stopinvestment.com/calculator/sip-calculator/
3. Risk Profile & asset allocation :
Asset allocation is an investment strategy or portfolio technique or financial approach of distributing your investments to dissimilar types of assets to minimize the risks.
Read more here → https://www.1stopinvestment.com/personal-finance/how-asset-allocation-helps-you-to-protect-your-portfolio/
Based on the above risk profile classification, keep your investments in Equity and debts funds accordingly.
4.Choose the Right Investment Options :
Based on the Investing Tenure (aka 18 – your Child age) and this below quick guide may help you to choose rightly,
- Index Funds → Suited when Tenure is greater than 10+years
- SSY → Suited when your kid is a girl & Tenure is greater than 15+years
- PPF → Suited when Tenure is greater than 15+years
- Recurring Deposits & Debt Funds → Suited when Tenure is lesser than 5 years
5. Review
Every year , Review your Child Portfolio and top up the investments as necessary. Initially it will look like the goal is far away but sooner it might become a short term goal. The asset allocation must be reviewed in line with your child’s age and the portfolio should be rebalanced every year.
6. Sample Planning
- Current Cost of Education your child wish : UG – Engineering – 10Lakhs (2.5 per year at Chennai ,a well reputed college)
- Inflation rate to consider for education : 11 %
- Years from Today : 18 – Child Age (3) = 15 years – Boy
- Future Cost : ₹ 47,84,589 – 48 Lakhs
- Risk Profile : Balanced – Equity 55% & Debt 45% i.e) Index funds & PPF
Trial Version → Download here
Hope this article helps you to plan for your child, share it with your friends who you might think it will be useful. Drop your thoughts in the comments—let’s learn and grow together.
