ELSS mutual funds are tax efficient and help in paying for your child’s education.
In mutual funds, your investment grows because of compound interest.
The cost of education has been skyrocketing these days and parents are trying really hard to provide the best education to their kids. According to a report, the annual expense of education increased by 2.75 times from 2008 to 2014 in comparison with the cost of education in the previous period. However, at the same time, the per capita income in India only increased by 2.49 times.
As the world is evolving, we need to look after different options to save and give the best education facilities to our children. Hence, mutual funds can help you pay for the best education for your kids. Let’s see why investing in mutual funds for your child’s education can be more beneficial than other investment options.
Flexibility
Mutual funds are flexible in terms of withdrawal and investment duration as they don’t have any fixed maturity date. It typically allows for easy redemption, unlike some investment options that have a lock-in period. It also allows the investor to withdraw the required amount whenever they need it. This flexibility helps you to utilise your investment returns for your child’s education.
Tax exemption
Through mutual funds, you can also invest in the name of your minor child. Investing in their name is tax-efficient. Under Section 80C (old regime) of the Income Tax Act, some mutual funds, such as Equity-Linked Saving Schemes (ELSS), offer tax benefits. You can lower your taxable income and contribute to your child’s education by making investments in ELSS.
Systematic Investment Plans (SIPs)
As the cost of education is increasing, you need to look out for different options, and one of the best options is Systematic Investment Plans (SIPs). It allows you to invest a fixed amount monthly or quarterly. By removing the guesswork associated with market performance, SIPs can assist you in escaping market volatility. The average cost of purchases is evened out over time with regular investing. This will help you to have some savings and also invest in your kid’s education.
Professional fund management
Fund managers are experts in identifying investment opportunities, managing risks and analysing the market. Investing in a broad range of securities from various industries and asset classes to diversify in mutual funds. Thus, investing in mutual funds can help you analyse the future possibilities for your kid’s education.
Potential for higher returns
Mutual fund managers don’t invest in a specific market but are diversified in nature. This helps in identifying the risk and maximising long-term returns. In mutual funds, your investment grows because of compound interest which will help you to gain a significant corpus for your child’s education.
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