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Mutual fund calculator: Monthly SIP enough for higher studies

Be it any parent, each one of them want to secure that their child’s future. The only way to ensure that your child is able to excel in their life is by providing them with the right type of education. The only way to ensure that parents have a decent amount of money saved is through proper financial planning for their child’s higher education. The reason financial planning is important is that the education prices are soaring, thanks to inflation. Whatever you have saved right now will lose its value by the time your child is ready for higher studies. This is the reason why parents may have to start investing what they have saved so that in the long run, their investments compound and turn into a commendable corpus to take care of their child’s education expenses.

The current cost of an MBA is around Rs. 20 lakhs and if you want to get into medical, the costs are somewhat similar. If your child is 10 years old right now, by the time he is ready for higher education the cost of such courses is expected to soar and go as high as Rs. 45 lakhs. To accumulate such a hefty amount, one may need an investment horizon of at least 10 years which is why parents must start planning for their child’s future when they are toddlers.

Not everyone has a clear idea of how much money they must save and invest so that they can achieve their long term financial goals like children’s education. Hence, parents depending on their risk appetite can consider investing in a solution oriented mutual fund scheme like Children’s Gift Fund. And to calculate the future value of their mutual fund investments, parents can make use of a mutual fund calculator.

Also referred to as SIP calculator, investors who wish to invest in mutual funds via SIP for their children’s education can make the most out of this free online tool. For those who aren’t aware, a Systematic Investment Plan or SIP is a simple and convenient way to save and invest a fixed sum regularly in mutual funds. Investors can decide how much money they want to invest and then invest the predetermined SIP sum every month on a fixed date regularly till their investment objective is accomplished. SIP can be an ideal way for parents to build a solid education corpus for their children as long term investments in the mutual fund via SIP can allow compounding and rupee cost averaging. This will allow parents to generate more returns while reducing their average cost of purchase.

An online SIP calculator can help you figure out whether your monthly mutual fund SIP investments are enough for your child’s higher education.

 Here’s an example to help you understand better how the SIP calculator works:

Suppose you want to build a corpus of Rs. 35 lakhs for your child’s higher studies. You plan to build this corpus in 10 years and have started a monthly SIP of Rs. 15000 in a mutual fund with an expected 10 percent rate of return. If you put these details in the SIP calculator it will compute and tell you that your current SIP investments will only help you accumulate a total sum of Rs. 30.98 lakhs at the end of your 10 year investment journey. This means that you will be 5 lakhs short of your education corpus. However, by investing Rs. 17000 you will be able to achieve your financial goal. A SIP calculator can help parents with such calculations to ensure that they are investing enough for their child’s future.