Mayuresh Kini, Principal Officer at Zinc, offers financial planning tips to help parents navigate the process.
Start early with an education-focused savings plan
One of the most common mistakes parents make is delaying financial planning for their child’s education.
According to Kini, “Starting early allows you to leverage the power of compounding, which means your money has more time to grow.”
He suggests that parents should begin planning as early as their child’s grade 8 or 9 to ensure a sufficient fund is built without financial strain later on.
“Consider dedicated education-focused savings plans that are tax-efficient, offer flexible withdrawal options, and ensure steady growth with minimal risk,” he added.
Saving in global currencies to offset exchange rate risks
Fluctuating exchange rates can impact the cost of sending money abroad.
Kini recommends saving in global currencies to mitigate this risk: “The rupee has historically depreciated against major currencies like the US dollar, so saving in USD, GBP, or EUR helps reduce the impact of currency fluctuations on your education fund.”
By diversifying savings into global currencies, parents can protect their child’s future education fund from market volatility and currency depreciation.
Investing smartly to grow your education fund
While saving is crucial, investing is equally important to ensure the fund grows at a pace that beats inflation.
“Simply saving money isn’t enough,” says Kini. “Investments should be aligned with inflation and rising tuition costs. Mutual funds, exchange-traded funds, and commodity ETFs are good options for diversifying and reducing risk.”
Mutual funds and ETFs offer a way to invest in global markets, while commodity ETFs help protect the portfolio during inflationary periods, according to Kini.
Aligning investments with education timelines
Kini stresses the importance of aligning investments with the child’s education timeline. “Parents of younger children can afford to take more risk with equity-based investments, while parents of older children should focus on stable, low-risk instruments as college approaches,” he explains.
For parents with 10 or more years to go, Kini suggests focusing on high-growth equities, while those with less than five years should look toward safer, more stable investments.
Seeking expert guidance for global financial strategy
Financial planning for education abroad requires a global perspective, and Kini advises seeking expert guidance.
“An expert financial advisor can help you identify the best investment avenues based on your child’s study destination and provide strategies to optimise tax benefits,” he says.
Additionally, financial experts can help with international payment solutions, ensuring smooth tuition transfers. “Professional guidance can help you avoid common financial pitfalls and ensure your education fund grows efficiently,” Kini concludes.
