For parents, ensuring a secure future for their children is a top priority. Among the many concerns, providing quality education is paramount. The cost of education has been on a steady rise, and this trend is expected to continue in the future as well. To keep up with the increasing expenses, it’s essential to build a significant corpus specifically dedicated to your child’s education. One of the investment instruments that can help you achieve this goal is Balanced Advantage Funds. Read on to find out more about balanced advantage funds and see how you can use them to build a corpus for your children’s education.
What are balanced advantage funds?
Balanced advantage funds are a type of hybrid mutual fund that dynamically allocates assets between equity and debt, depending on market conditions. They work similarly to any other mutual fund but with the added advantage of dynamic portfolio management. BAFs aim to provide investors with the best of both worlds: capital appreciation through equity investments and stability through debt investments. These funds offer a balance between risk and return, making them an ideal choice for long-term financial goals like funding your child’s education.
Benefits of investing in balanced advantage funds for a child’s education
BAFs automatically adjust their equity and debt exposure based on market conditions. This is done with the help of professional fund managers and this dynamic asset allocation helps manage risks and minimize losses during market downturns.
The equity component of BAF provides the potential for capital appreciation, ensuring that your investment corpus keeps pace with rising education costs, beating corpus-eroding factors like inflation.
The debt portion of BAF offers stability and regular income, protecting your investment corpus from extreme market volatility.
Steps to build a corpus for a child’s education with balanced advantage funds
Estimate the education expenses
The first step in building a corpus for your child’s education is to estimate the future cost of education. Consider factors like inflation, the type of degree, and the country in which your child may pursue their education. Since a lot of these factors are tough to figure out early, be open to dynamically increasing the investment to the fund in the future.
Set a goal
Based on your estimation, set a realistic financial goal for your child’s education corpus. This goal should account for factors like the number of years left until your child starts their higher education and your current savings. Inflation could play a spoilsport and is often unpredictable, so ensure that you account for it as much as you can.
Start investing early
The sooner you start investing, the more time your money has to grow. Begin with a small amount and gradually increase your contributions as your income increases.
Opt for SIPs
SIPs allow you to invest a fixed amount regularly, inculcating a disciplined approach to investing. They also help average out the cost of your investments, ensuring you benefit from the power of compounding and rupee-cost averaging.
By following these steps, you can create a solid financial foundation for your child’s education using Balanced Advantage Funds. With a disciplined approach, early investments, and regular monitoring, you’ll be well on your way to securing your child’s academic future and giving them the best possible start in life.