Smart Start: A Father’s Guide to Future-Proofing His Child’s Education

Scene: Inside Jatin’s office. Ashwini, looking both excited and worried, has come for financial advice regarding his newborn’s future.

Ashwini: Thank you for meeting me, Jatin. My wife and I just had our first child, and I’m already worried about their future education.

Jatin: Congratulations! That’s wonderful news. It’s great that you’re thinking about this so early. What’s your primary concern?

Ashwini: Well, these days children choose their careers. My parents decided that I would be an engineer when I was born, but times have changed. How do I plan financially when I don’t know what path my child will take?

Jatin: (smiling) That’s a very valid concern. Let me share something interesting – engineering might cost around ₹79.3 lakhs after 15 years, and medicine could go up to ₹1.2 crores, assuming 8% annual inflation.

Ashwini: (shocked) What? That’s… that’s astronomical! My neighbour just suggested me a money-back insurance policy…

Jatin: (interrupting gently) I’m going to stop you right there. While many Indian parents opt for money-back policies, they’re not the best solution. Instead, let me show you a more effective approach.

Ashwini: I’m all ears.

Jatin: Start with monthly SIPs in mutual funds. Look at these numbers – if you start now, you’ll need to invest about ₹10,996 monthly to accumulate ₹50 lakhs in 15 years, assuming 11% annual returns. But if you wait just five years, that monthly requirement jumps to ₹23,041.

Ashwini: That’s a huge difference! But isn’t the stock market risky?

Jatin: That’s why we’ll use a balanced approach. Think of it like a three-course meal. Your main course would be diversified equity mutual funds, especially flexi-cap funds. They help beat inflation over the long term.

Ashwini: And the other courses?

Jatin: (chuckling) For your appetizer and dessert – safer options like PPFs and Sukanya Samriddhi Yojana. They’re government-backed and tax-free instruments. But remember, don’t make these your main course – fixed returns might not keep up with the education costs. Stick to regular diversified funds. Also, avoid ULIPs – they’re expensive and inflexible.

Ashwini: But what if my child’s interests change? What if they want to study abroad?

Jatin: That’s the beauty of this plan – it’s flexible. As your child grows and their interests become clear, we can adjust the target amount and investment strategy. And here’s a pro tip – about 2-3 years before you need the money, we’ll gradually move it to safer options through an STP.

Ashwini: And if we still fall short?

Jatin: A small education loan can bridge the gap. It might even help teach your child financial responsibility and he will start paying off the loans. The key is starting early and staying flexible.

Ashwini: (looking relieved) This makes so much sense. When can we start?

Jatin: How about now? Let’s work out the exact numbers based on your current finances and comfort level.

Ashwini: Perfect! You know, I feel much better knowing there’s a clear plan. It’s like you said – start early, stay flexible, and keep reviewing the plan.

Jatin: Exactly! Remember, we’re not just planning for education; we’re planning for your child’s future, whatever they may be.

Ashwini: Thank you, Jatin. I am much relieved now.