Have you travelled to any Foreign Country in last 10 yrs ? Have you Visited neighbor countries for some marriage or functions ? Has there been occasion's when you heard about Your friend's Child going to USA/ UK or Australia for higher education ! I am sure you must have experienced at least one situation mentioned above . The reason i have asked you all this is to show that how the world is getting smaller and easy to access . In our Younger days travelling outside state was a big thing to do , But now we are seeing younger kids traveling , roaming around the world so easily .
As they are getting exposed to western cultures , their ambition of learning abroad is increasing . More and more students wishes to attend foreign universities . The start up Breed Grooming in the silicon valley has become inspirations to the younger budding entrepreneur's across world and India . Such new generations are having Foresights , Vision and aspirations to recreate the world . We have seen many examples of such new startups creating a big impacts on the world and life .
But when we see things from indian mentality , every parent will get worried about the cost of foreign education. Many people i have seen have taken loans to fund their kids abroad education even at older age . Some of them had spend their own retirement fund to fulfil their kids dreams , Making their life riskier in retirements . You can check around your self to find such parents , Who are facing challenges in fulfilling their daily needs after spending their retirement kitty for kids education . can this be avoided ! Yes surely if you plan things well and in time it can be .
Many parents ask me about how they can create plan for foreign education fund -
Let me share you the path for same -
As example we consider here the cost of MBBS in Us As $200,000 to $300,000 Today !
Your child's age as - 2 Yrs
So the actual fund may be required 13 to 15 yrs later , Now you need to calculate the future fund amount ! the regular inflation is said to be 6-7 % but in case of education it can widely vary , still for this example we consider it as very moderate , i.e 10 %
so what will be the required fund value after 15 yrs -
it will be approx 12 lakh $ , after seeing this huge figure many of you might get more worried ! its natural but that will not help ,
Now , we know how much money we need to have after 15 yrs , How that can be created ?
By putting money in your JAR ! PIGGY BANK ! SAVING ACCOUNT ! - No it will not help to that extents , You need to find the ways which can help your money grow with the rate of the inflation or more than it so that you can reach your goal , Check the below figures -
as per the above calculations if you are able to save & invest 25000 $ Per year and able to get the 15 % returns on your investments then you will be able to create almost 12,00,000 $ FUND as required .
You can even invest 2000 $ / month to reach your set figure . So in order to plan for your kids foreign education you need to follow below steps --
1 - Current Cost or the value of the required amount
2 - Future value of the current cost
3 - Payment ( yearly / monthly ) required to create the fund
4 - Ensure consistency 5 - Increase the returns to speedup the fund creation
Here i have taken 15 % returns , if you can find the way to earn more than this then it will make your goal easier , while doing this you also need to ensure the safety of the portfolio by selecting right asset combinations . For this you can consider -
Direct equity
Foreign Equity*
Mutual funds
Ulips
High Coupon Bonds*
Gold*
Real estates*
Reits*
These are the suggested options , it can be variable based on the point of its consideration .
As the above calculation shows , if you are able to get average 10 % extra returns during the specified period then our Investment amount required gets reduced by 52 % and its so easy to achieve your goals , You can get it surely !
But its important to have the Right basket . These are your Tools to get what you want . One should also have adequate majors to avoid possible leakages or Financial impacts because of the unexpected events . In such case taking Proper protection will surely of great help !
Pls do take in to consideration the Risk and rewards for the chosen asset classes based on your financial profile and Goals.
You can share your valuable comments if any , thanks