Cost of Children's education fund - India
1. The costs of Funding the Children's Education NOW.
Though Online Universities will replace most of the College Education in future, we would still be required to have minimum qualification. Per year minimum its 1.2 Lakh. So for 5 years 6 Lakh.
2. The costs of Funding the Children's Education in FUTURE.
Usually, the parents start looking into this when the child is 2 to 3 years old. That is when the start schooling for their child.
Lets calculate the number of years needed to fund the Higher education: 17 years.
The cost of education increases by 10 to 15%. I am keeping it on the higher end 15% so I don't end up in trouble.
Years : 17
Inflation : 15.
Amount needed after 15 years : 600000*(1+15/100)^17 (Compound Interest formula : P[1+R/100)^N])
Amount needed : 64,56,758.40
3. The savings required per month.
I am not going to talk about Equity or MF. I am simply concentrating on Recurring deposit at the rate of 8% for 17 years.
We can use a simple formula in MSExcel: PMT(Rate,Num of Years,PV,FV,type)
Rate = 8%
Num of Years = 17
PV = 0 (Initial amount)
FV = 64,56,758.40
Type - Not Required
SIP Monthly = 14,953.22. [PMT(8%/12,17*12,0,6456758) ]
This plan is generic for any common man, who starts investing.
Tax on Interest yielded is not taken into account.
Next, We could plan for Children Marriage Fund - http://healthywealthyhomemaker.blogspot.in/2013/01/childrens-marriage-fund-india.html
Retirement Fund - http://healthywealthyhomemaker.blogspot.in/2013/01/how-to-plan-for-retirement-fund.html
