I have met quite a number of people who could not realise their dream of getting into a Professional Course, for want of funds at the right time. Though no one could be blamed for these happenings, lack of planning by their Parents could definitely be one reason.
The irony is that the same affected persons do not take enough care to plan for their Children’s Education. Is it lack of awareness or sheer negligence ? Is it ignorance or indiscipline ? It is for them to think about……..
What should be the objective of a Parent towards his/her child’s education ?
1) Availability of funds at the right age (could be 17 years, in general) to take care of under graduation
2) Irrespective of whether the Parent is alive or not, the originial goal as mentioned above should be met with
What should the Parent do in order to achieve the above ?
1) Invest regularly (not save regularly)
2) Commit for the long term
3) Take the risk of getting into equity related instruments
4) Shift from equity to debt towards the very end as we approach the goal (in the last 1 or 2 years)
Having done with the objective and the method, the next thing is to DO IT, by selecting a good product. Though I have seen many products that could meet the above criteria, Unit Linked Young Star Plus from HDFC Standard Life is a pretty good option to put money in. The product has exciting features which could be in line with any parent’s goal (as sighted above) like 6 type of funds (liquid, secure managed, defensive managed, balanced managed, equity managed & growth), free switching & premium redirection options, Insurance Cover upto 40 times of premium, Double Insurance Benefit, loyalty additions & much more.
Let us take a scenario of a parent, of a child aged 1, buying this product. He commits himself Rs.50,000/- every year for 16 years. Of the six fund options available in this product, this person chooses “GROWTH FUND” (100% equity). He also chooses an Insurance Cover of Rs.2.5 lakhs (in addition to whatever he already has). If the Parent is fortunate enough to survive till 16 years, he is likely to make Rs.25.57 lakhs at the end of the term, taking an annual growth rate of 15% compounded. In addition to that, every year Company gives loyalty additions to the Parent by adding 0.1% of the entire units held.
If the Parent dies during the term, then
a) Appointee of the child gets Rs.2.5 lakhs immediately,
b) further payment of premia is made by the Company till the end of the term &
c) Total value of the fund is paid at the end of 16 years.
What more can you ask for your in your dream of giving a fantastic education to your child ?