A big fund is necessary for the ever-increasing cost of education. Preparations for this should be started when your child is in the first or second class. This will give you a longer period for investment. The longer the investment period, the greater the possibility of your money growing. Today there are many investment options in which a big fund can be created in the long term by investing for the child's higher education. Among these, the equity scheme of mutual funds and Sukanya Samriddhi Yojana are the most attractive. By investing a small amount every month in both, a big fund can be created in a few years.
Investing through SIP in equity schemes of mutual funds
Investment in equity schemes of mutual funds can be made through SIP . In this, money will be automatically deducted from your savings account on a fixed date every month. If you are investing Rs 1,000 every month in equity MF scheme through SIP, then you will be able to invest Rs 12,000 every year. This means that you will be able to invest a total of Rs 2.4 lakh in 20 years. If we assume an annual return of 12 percent on this, then a fund of Rs 9.68 lakh will be ready for you in 20 years.
Risk in investing in equity schemes
It must be remembered that there is a risk in investing in the equity scheme of a mutual fund. Since this money goes into the stock market, the fluctuations in the stock market will affect the value of your investment. However, experts say that if you are investing through SIP for 15-10 years, then you do not need to worry about the fluctuations in the market. In the long term, the risk on returns in investing in mutual funds is reduced.
Sukanya Samriddhi Yojana is a government scheme
You can also invest in Sukanya Samriddhi Yojana (SSY) to create a big fund for your child. This scheme is of the government. Investing in it also provides the benefit of deduction under section 80C of Income Tax. In this scheme, deduction can be claimed by investing a maximum of Rs 1.5 lakh in a financial year. If you invest Rs 1,000 every month in this scheme, then your investment every year will be Rs 12,000. In this way, you will invest a total of Rs 2.4 lakh in 20 years. The annual interest in Sukanya Samriddhi Yojana is 8.1 percent. In this, a fund of Rs 6.07 lakh will be created in 20 years.
Also read: Income tax : Calculation of tax is easy in the new income tax regime, know how much your tax will be
What should you do?
The returns in SSY are low, but the security is high. People who cannot take much risk can invest in this scheme. This scheme has the guarantee of the government. Therefore, investing in it is safer. The second advantage is that it also has tax benefits. There is a risk in investing in the equity scheme of a mutual fund. However, the returns in it are high. If you can take the risk, then you can invest in the equity scheme of a mutual fund.
