How SIP calculator can help in child education plan

[Kanika Shelatkar]

SIP Investment is a hassle free way of making mutual fund investments for the short, medium or long term, based on one’s financial goals including child education plan. A Systematic Investment Plan or SIP is where an investor chooses to invest a fixed amount periodically in a mutual fund scheme for a given period of time. The SIP frequency can be daily, monthly, yearly or quarterly, based on what the investors want. Once a SIP mandate is given while starting the SIP, the same SIP amount gets debited at the chosen frequency from the investor’s bank account, without him/her having to worry about it.

While starting a SIP is easy, planning the same may not be that easy. This is where, you need to take help of a SIP investment calculator, available online.

Suppose, you want to grow your wealth, and can invest Rs 15,000 per month in a SIP for 10 years. Assuming your age is 25 and you expect 12% return, how you know what would be the final corpus at the end of the SIP Tenure. This is where the SIP calculator India available online comes handy as it immediately tells you the future value, which is little over Rs 34 Lakhs in this case. All you have to do is enter the SIP amount, period and the expected return, that’s it!

Let us now see another example as to how SIP investment calculator can help in child education plan?

Mr. Verma wants her daughter, who is 6 years old now, to pursue an overseas degree course when she is 21 years. The current cost of the overseas degree is Rs 35 Lakhs. Unable to understand how to plan for this, Mr. Verma contacts a financial advisor.

The financial advisor helped him in drawing his daughter’s child education plan while accounting inflation over the years. He used a SIP investment calculator and gave the following inputs in that – Current education cost as 35 Lakhs, time period 15 years, expected return 12% and expected education inflation 10%. The SIP calculator gave the result instantly – Future education cost as Rs 1.46 Crores (due to inflation) and the monthly SIP required as Rs 29,300.

As you can see in the above example, how easily the SIP investment calculator helped you understand why your child education plan goal amount should be Rs 1.46 Crores and not Rs 35 Lakhs as you need to account inflation.

Please also note that drawing a child education plan, you should also account the other costs like travel, accommodation, etc. Therefore, in context to the above example, you should add these costs too in the education of 35 Lakhs and then arrive at the total future cost and start the monthly SIP accordingly to reach this goal.

One more point is that suppose you have already saved some money for this goal, then you can input that savings also in the SIP investment calculator and thereafter check the revised monthly SIP amount. For example – You have already saved Rs 5 Lakhs, then the monthly SIP amount would be Rs 23,800. As you can see, you need to invest less Rs 5,500 (Rs 29,300 – Rs 23,800).

SIP calculator India and SIP investment calculator is a powerful and dynamic online tool which helps you plan any of your goals including the child education plan. Plan early and plan well, so that your child can have the dream education.