Planning for a child’s education probably requires a lot of hard work and discipline at the parent’s end. To reap the significant benefits of a child education plan, you need to pick the best investment schemes and start investing early. It is no surprise that the cost of education everywhere and in every field is touching skies. Hence, it becomes essential to invest right.
Mutual funds are one option that can help you fulfill your child’s education goals in a disciplined manner. You can create your own portfolio depending on your risk appetite and time horizon. For a better understanding of your child education plan, you can also contact financial advisors such as FinEdge. They offer services such as risk profiling, asset allocation, and goal mapping, which will further help achieve many lifelong dreams.
Below are some of the reasons why mutual funds are the right pick for your child education plan:
- Risk Diversification
A significant advantage of investing in mutual funds is diversification of risk. Every investment is bound by three types of risks – company risk, sector risk, and market risk. Company risk and sector risk are an unsystematic risk, while the market risk is known as systematic risk.
Mutual funds will help you diversify these unsystematic risks by investing in a diversified portfolio of stocks across different sectors for your child’s education plan. Therefore, mutual funds have a much lower risk than individual stocks. - Disciplined Investing
Many people fail to build a substantial child education corpus because they are not able to invest in a disciplined way.
With mutual funds, you can invest over a long period, which is essential for an effective child education plan. Moreover, you can choose Systematic Investment Plans (SIPs) to invest through a disciplined approach to meet various financial goals.
By regularly investing through SIPs, you can build the habit of disciplined investment, which will benefit you in the long run. - Variety of Schemes
Mutual funds provide you with a variety of schemes to suit your risk profiles and investment objectives. Apart from equity funds, there are hybrid funds, debt funds, liquid funds, and tax savings schemes to help you build wealth over the long term.
Depending on the amount you want to invest in a child education plan, you can choose from these types of funds and diversify your investment portfolio alongside. - Fund Management by Professionals
Another key advantage of choosing mutual funds for child education planning is that they are professionally managed. Professional managers have years of experience and knowledge to guide you to allocate your assets effectively in an attempt to limit losses and maximize wealth creation possibilities.
Find the Right Balance for the Best Child Education Plan
An early start is not enough. As a parent, you must also invest the right to get the best possible returns. The most crucial aspect of following a child education plan is to determine how much money you need to accumulate for your child’s goal. You should always factor in inflation while determining your end goal.
Mutual funds get you the exposure to equity and at the same time, diversify the risk associated with investing in individual stocks. You can invest in mutual funds through SIPs that enable regular savings through an automatic debit from your bank account monthly/quarterly/yearly. As an investor, you should also gain insights about various ways to invest right through mutual funds to fulfill your objectives. If you seek guidance about investment planning for your child’s higher education plans, connect with financial advisors. They will look into your current set of liabilities to devise a plan that is most suited for you.
