look news india
Financial Planning: Every parent worries about their child’s education. School fees and higher education expenses are increasing day by day. But financial experts are suggesting a plan which can help in meeting the education expenses and also save more than Rs 50 lakh. This scheme is Step-up SIP, which provides relief from the hassle of education loan.
What is Step-up SIP?
According to experts, if you start investing Rs 10,000 per month from the birth of the child and increase it by 10% every year, then you can stop the investment after 10 years. After this, Rs 25,000 per month can be withdrawn for the child’s education until he is 10 to 22 years old. The scheme is based on 12% compound annual growth rate (CAGR).
Understand math.
According to them, you will invest a total of Rs 19.12 lakh in 10 years. At compound rate this amount will increase to Rs 32.69 lakh. You will withdraw Rs 36 lakh for education in the next 12 years, and will still be left with Rs 51 lakh in your account. This amount will be used to fulfill the future dreams of the child.
education loan comparison
If you take an education loan of Rs 36 lakh, the EMI for 10 years at 11% interest rate will be around Rs 50,000 per month. This is double the SIP amount and also includes a heavy interest burden. Step-up SIP is in line with the increase in your income, so that in the 10th year you will invest Rs 2.8 lakh per annum, which is easily possible with promotions and salary hikes.
expert advice
Use low-cost index funds, always maintain liquidity for emergencies and review your progress every year, experts say. This scheme not only covers the education expenses but also provides a strong financial foundation for the child’s future.
Step-Up SIP is a smart financial plan that gives you financial freedom by freeing you from the worry of education. With just 10 years of investment, you can make your child’s education free and save lakhs of rupees.
