Investing for your child's education

There's no doubt that your child's education is a critical financial goal that is critical to ensuring good quality of life for your child. One aspect in which your child's education goal differs from all others is that the date by which you need to attain this goal is absolutely fixed. If your investment plans towards owning a home or car are derailed for a couple of years, there's no need to panic because you can simply shift your goalposts on when you want to acquire your home or car. But you need to be prepared with an adequate corpus to fund your child's college degree by the time she turns 18. Financial firms are well aware of the emotional value of your child's education goal and hard-sell a bunch of products designed to meet this goal. But, in our experience, plain vanilla mutual funds selected for their track record do a far better job of getting you to your child's education goal than these hyped-up 'child' plans. Child ULIPs from insurance companies are a no-no on three counts. They divert part of your investment towards a term cover which can be bought at much lower costs separately. They carry minimum five-year lock-in periods that prevent you from switching to a better alternative if the plan delivers poor performance. Opaque labelling and costs

This article was originally published on July 14, 2021.