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Why is investing better than saving to ensure your child will have a bright future?

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Your children are the greatest treasure that you hold with yourself. That is why they hold prime importance in your life. Especially when it comes to their future, you don’t want to take any chance. You endeavor to provide them with the best quality education so that they are well-equipped with the right skillset.

Towards doing so, you tend to worry about having the right financial resources to send them to the best universities for higher education.

As estimated by the National Sample Survey Organization in 2014, the annual inflation rate of education in India is about 10 to 12%, says the source. It shows how the burden of education costs is rising year on year. To deal with it, you may end up borrowing loans and fall into a debt trap, which can also cause further stress.

If a loan is not a good option, will saving work like a better alternative to secure your child’s future?
You may think of it as an option. But regularly saving a specific amount may not help you finance your child’s education. A much better way to build up your financial resources for this purpose is to invest your money wisely. For instance, buying one of the best child’s education plans can help you get the required financial support in making your children’s career.

Some of the reasons why investing money is a better way to finance your child’s future than saving it are as follows:

1. Comprehensive Benefit
If you invest in a child’s education plan, you will get the twin benefit of a life cover along with a maturity benefit. It will ensure that your children’s future is thoroughly insured. The life cover will provide them with financial support in case of your untimely demise, thus ensuring that they realize their dreams even in your absence.

On the other hand, the substantial maturity benefit will provide perfect financial backing to help you meet with the high fees and other educational expenses.

2. Higher Returns
If you keep aside a sum of money and save it for a period, you will have the same amount even years later.

On the other hand, investing your money in a child’s education plan is highly advantageous. You will have a much higher sum of money than what you invest in the plan.

It is because, unlike savings, investments involve the compounding effect. It means you will continue to earn increasing returns on your invested money in the form of interest. At the time of maturity or withdrawal, you will not only get the amount you invested, but the accumulated interest added to it over time. This larger sum of money will help you meet with the expensive admission costs and hostel expenses with relative ease.

3. No loss to your emergency funds
By investing your money, you create a corpus of funds separate from your emergency funds. Let’s say you invested in one of the best child’s education plans. If a medical emergency strikes, you will have enough funds to deal with it. This means you won’t have to compromise with meeting other needs or expenses. With the returns you get on your investments, you can rebuild your emergency funds for later use.

4. Tax-Saving Benefits
When you decide to save money, you will not be able to receive any tax benefits. However, when you invest it, you will also be able to enjoy tax exemptions and other benefits, depending on the instruments you choose.

Such tax benefits will help you save your hard-earned money, which you can utilize to meet other miscellaneous educational expenses for your children.

Now that you know all the benefits of investment towards securing your child’s future, start planning at the earliest. The earlier you plan, the more significant benefits you will get in the long run.

If you want to know about the best child’s education plan you should opt for, you can take support from financial advisors like Finedge. They can help you understand which plan will align with your child’s education needs and give you the best returns.

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