There are a few things that parents can do even before the child attains the age to go to a college. Education today is the key to professional success and is treated as an investment by parents who are willing to go that extra mile to give their child the best possible opportunities.

In recent years, education has globalised and there is increased awareness of the best institutes worldwide and the fact that under graduation or graduation can be done abroad by a lot of students.

This has resulted in more and more Indian students going to various countries for education; be it for under grad or post grad courses. Undertaking a course at these schools involves a substantial investment in time and money.

While planning for child’s future, parents usually commit following mistakes:

  1. Buying ULIPs: Parents are lured by advertisement by various insurance companies ‘protect your child’s future’. Buying these policies gives them a sense of satisfaction that they have secured their child’s future.Reality is that the funds are invested into stock market and the fund management and other charges are exorbitant. And the policy maturity amount may not be sufficient to meet child’s future needs.Therefore, never buy insurance linked investment products.
  2. Underestimating the cost: When planning, parents may think of the cost in today’s value and plan accordingly. However, the cost of education actually increases more than even the general inflation in the economy.Example, MBA cost of Rs 15 lacs today will translate into Rs 70 lacs in 20 years. Considering this rise in cost of education due to inflation is critical when parents plan for their child’s future.
  3. Inappropriate investment vehicles: Allocating funds in safe assets usually give sense of security to parents. However, the real worth of the money does not increase after considering inflation.Therefore, allocation towards growth assets such as equity and real estate is very important.
  4. Insufficient life cover: Your child’s future can never be secure, until YOU are adequately insured. Parents must buy a term plan that insures them for the value of child’s future goal requirement.If something were to happen to the parents, child’s future goals will still be met.
  5. Ignoring their own retirement: Doing investments just to make kid’s future secure by putting your own future at stake is not recommended.Children’s future planning is one of the important goals, but it should not be looked upon in isolation. Let your child’s future goal be part of your holistic planning.
  6. Procrastinating: There are parents who are not proactive when planning for their child’s future. Parents who start late will have less time to save their money and may not be able to save enough for their child’s future goal requirement.

Parents should plan for their future and child’s future as early as possible. A combination of growth oriented financial products should be selected and the investment should be made on a regular basis.


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