Importance of child education planning

As a parent you want to provide your child a better education so that your child’s future is secured. But have you ever tried to find out the cost that is going to be incurred on your child’s education? There are many hidden costs like coaching fees , application charges, tuition fee etc., for being financially prepared for those cost you need to have a proper planning for it.



1. Start early:
Now you will think how advance planning is going to help your child’s education. Let us take an example, consider the cost of higher courses is 50,000 per annum, plus the hidden costs. The same course fees 15-18 years down the line will cost around 2.5 Lakhs per annum as inflation goes on increasing. Now multiply with number of years course duration will be. You will get the cost that you have to provide for your child’s education at that time. If you do not plan for this cost early then you will have to get under the mountain of loan, which will affect your savings for your retirement at that time, and also your other financial needs.




2. Know how much to invest?
Generally we don’t have the idea that how much we should invest to get the target amount for child education. For this you can do the calculation by using the following:

Contribution required per month =
[Target Amount * rate of Interest] / [(1+ rate of Interest) * { (1+ rate of Interest) ^ (tenure*12) - 1 }]


3. Where to invest?
Now you have calculated the amount you need, and the contribution you have to make per month to achieve that target amount. Question arises where to invest? Every individual have different risk appetite and knowledge and depending on that he can choose different investment products through which he can generate returns. Invest only if you understand the investment avenue, you are opting for and review the investment performance regularly. Some of investment option available are PPF, mutual funds, NSC, Equity Mutual funds, Direct Equities, bonds.

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What to look for before making an investment decision

1. understand the basic nature of a particular asset class and the principles of investment that should form the basis of their investment decisions.

2. have good assessment of your risk appetite

3. investment in real estate is a local subject and its prices are influenced more by local factors than general economic conditions

Planning your investment

Investing in stock

In this article I am going to give information about the "stock".

As a beginner you should first understand the stock market. A stock market is the public market where company stock and its derivatives are traded at agreed price.

Now question arises what is stock/share? The stock is divided in share. Every share has a face value you can understand it as value per share. A share of stock is the smallest unit of ownership in a company. If you own a share of a company’s stock, you are a part owner of the company.

Stock is divided in two categories:

1. Preferred stock, and
2. Common stock.

Preferred stock holder don’t have voting rights whereas common stock holder got voting right they can influence the corporation (objectives and policy, stock splits, and electing the company's board of director) .

No fixed dividend is paid out to the common stock holder, but in case of preferred stock fixed dividend is paid out.

RBI’s monetary policy 2010

The RBI, in a report released on Monday, said monetary management in the current fiscal will be dominated by the challenge of moderating inflation which is the highest among Group of 20 nations, while remaining supportive of growth impulses. And that is what came through in today’s policy.
RBI’s monetary policy 2010

Investment Avenues in India

When i started thinking of investment the most common option used to get was "stocks"
But stock is not the only option available for investment. Once, you have clarified your vision you should choose the right investment option that suits your vision. In India the investment option available to us are:
stocks,
mutual funds,
bonds,
real estate,
gold and precious metal,
bank fixed deposits,
national saving certificate,
ULIP,
SIP, and
PPF

depending upon your vision and returns you are looking for you can opt for any of the option that are available to you. But before you invest you should also check the risk associated with that investment and what is your risk appetite.