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Today an increasing number of parents are aspiring to send their children overseas for pursuing higher education. However, the task is not as easy as thought. Parents have to systematically prepare and factor in currency fluctuations, inflation, time gap, in order to attain this goal. Also, one has to be realistic in planning for this goal as mere assumptions could lead one nowhere.
Target amount: At present, the cost of study overseas is 10 to 15 times higher than the cost of education in India. The percentage gap could broaden or narrow depending on the selection of country, university or time period. For instance, a course costing Rs. 5 lakhs in India could cost Rs. 50 lakhs overseas. Again, one has to apply inflation to this cost in order to arrive at a tentative cost after a certain number of years. Also, parents should add other costs such as travelling, boarding and miscellaneous expenses into the target corpus
Early is easy: Requirement of Rs. 75 lakh towards study expenses of your child 10 years from now appears to be an impractical goal. What if the investments were started five year earlier, which helped in amassing Rs. 30 lakhs corpus already? The balance corpus of Rs. 45 lakhs over 10 years can become an easy goal now.
Currency movements: One has to pay in foreign currency for studying abroad, therefore, the role of currency movements plays a vital role. In order to safeguard against currency fluctuations, parents should consider investing into a globally diversified portfolio. The portfolio should invest in funds with exposure to multiple countries and currencies.
Switch on time: Once the goal is nearing, parents should systematically transfer their funds from equity-oriented schemes to debt schemes, in order to protect against market fluctuations.
Withdraw what is needed: It is not necessary to withdraw all the funds at once as the accumulated corpus aims to cover both fees and recurring expenses during the entire period of the course. Parents should withdraw only the required sum and let the balance earn returns as per the scheme.