Both goals are important and an investor must not let one come at the cost of another. But, if they are not proactive in providing for their child's higher education systematically then they may find themselves sacrificing out of their retirement kitty to cater to this vital goal.
Now, this can seriously affect their retirement planning and so, some other needs to be devised to handle this situation differently. An investor often finds it hard to manage it all. It can potentially turn up into a big problem. They may not have the required expertise or sufficient knowledge to counter this problem. And this is where experts come into play.
One should always get in touch with the most proficient financial experts like Wealthclock Investors. They offer the most helpful financial investment guidance. There are numerous ways one can avoid digging into their retirement pool and also prepare well for their child's education goal. This article is intended towards informing readers of the same. They can check them out below.
Ways to manage this threatening problem
Separate the investments
Ideally, both of them need a long investment horizon. Investors are likely to have more years to plan their retirement though and this makes it tempting for them to use up their retirement savings towards their child's higher educational goal if needed. As the access to medical facilities improved, it has increased the average life expectancy.
So, cutting their retirement kitty short could well be harmful to their financial health in old age. An easy way to address this to separate the investments for both these goals. Considering the long-term nature of such goals, investors would end up using equity mutual fund investments. But they should try to keep the product selection separate for every goal.
This will help investors distinguish and use just the pile meant for the educational goal when the right time arrives.
An achievable goal
Investors have to work backward on this. Like for instance, if an investor has an 8-year old child then it gives them 10 years to plan his higher educational goal. It is too soon to know exactly what career he will opt for and where. So, the investor has to begin his calculations with the high-cost options.
A good look at the cost of undergraduate courses overseas in popular countries like Australia, Singapore, the US, and the UK will help a lot. As soon as they have a specific number for the present cost, they must inflate or increase the cost on a yearly basis by a 10-12% margin for the next decade. This way they can come across a figure of what it is likely to cost them ten years later.
Working backward with an online goal calculator will help them see what type of monthly investments they will have to make in equity-linked products to achieve their goal. Monthly SIPs in equity mutual funds will do the job just fine. So, with separate goals, early investments and proper planning people can effectively manage their child's education expense without holding back on the retirement plans.