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Child Education Plan: How much to save for the child’s education according to inflation, so that the amount does not fall later, understand the complete mathematics

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Child Education Plan: How much to save for the child’s education according to inflation, so that the amount does not fall later, understand the complete mathematics

The cost of education will also increase after the coming 15-20 years according to inflation. Therefore, the increased cost should be calculated before initiating the savings.

Child Education Plan: When you start saving for your child’s education, it is important to take care of inflation during this period. The cost of education in India is increasing continuously. The continuous increase in the cost of higher education and other related costs is becoming a cause of concern for the parents. As inflation is increasing continuously, accordingly the cost of education will also increase after the coming 15-20 years. If you are going to save for your child’s education, then you should calculate the increased cost before investing.

This way the cost will increase

An engineering course which may cost around Rs 7 lakh today, after 16 years, at 7 per cent inflation would cost you over Rs 20 lakh. Similarly, higher education or post graduation course costs around Rs 20 lakh in today’s time, but according to inflation, this cost may increase to Rs 60 lakh in the coming 15-20 years. Keeping this in mind, parents should have a clear financial goal and investments should be made on that basis.

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can calculate like this

You can use the formula given below before you start investing. With this, you can find out how much a course will cost in the coming time according to inflation.

Increased cost (IC) = current cost (PC) (1 + r / 100) n

Here

IC = is the future cost of a course.

PV = is the current cost of a course.

R = inflation rate.

n = the number of years in which you want to reach your goal.

understand by example

accept it

PV = Present cost of a course is Rs.5 lakhs.

R = inflation rate is 7 percent.

n = time taken to reach the target is 16 years.

According to this formula, after 16 years, the cost of attending a course will be –

5 X (1 + .07) 16 = Rs

Here you can see that the cost of a course which costs Rs 5 lakh in today’s time becomes Rs 14.70 lakh after 16 years from today. This means that keeping this increased cost in mind, parents should invest only. The reason for calculating the increased cost is because it tells you exactly how much to save. If you save without taking inflation into account, then it can cause problems for you in future.

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how much to save

By saving Rs 850 per month, you can get Rs 5 lakh after 16 years at an estimated annual growth rate of 12 per cent, but keeping inflation in mind, you would need Rs 14.70 lakh. For this, you have to actually invest Rs 2500 every month so that after 16 years you can get an amount of Rs 14.7 lakh.

Similarly, to get Rs 1 crore after 15 years, you need to invest Rs 20000 every month at an estimated growth rate of 12 per cent. You can use the inflation calculator and SIP calculator to plan your investments and reach your long-term goals with ease.

(Article: Sunil Dhawan)

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