A step-by-step guide to planning investments for your child’s overseas education


Thanks to recent advancements in the Internet, access to information is now literally at our fingertips. No matter what part of the world we find ourselves in, we can now browse the websites of countless universities, companies, and even hotels to get out of our geography and explore our potential.

Through social media marketing, interested students can browse the curriculum, view school rankings, access testimonials, view campus, and apply for college admission through online applications by swiping on an advertisement.

While this all sounds wonderful, education abroad can be an expensive affair. Due to currency fluctuations, tuition, accommodation, student visa and travel arrangements can be a significant amount. One can apply for student loans and entrance scholarships, but these require a lot of formalities and students must continue to repay their loans long after they have finished their studies.

So how do we plan our finances so that education abroad becomes a rewarding and seamless experience? The answer is to plan global investments when your children are still young.

With the world making connectivity easier, you might want to upgrade your savings game and add ways that will help you save and grow your money.

Let’s look at some preparations one should make before applying for a student loan.

One can apply for student loans and entrance scholarships, but it involves a lot of paperwork and students have to continue repaying their loans even after graduation.

Choose the right country: When selecting the right country to apply, be sure to select the one that offers the best educational experience for your budget. You may want to consider choices that give you the best return on investment (ROI) so you can pay off your student loan seamlessly. As banks consider placements and likely salary before sanctioning the loan, make sure you have carefully considered your options and selected the best country.

Explore funding options and scholarships: You may want to make sure that your financing strategy is a combination of savings, investments and financing of family members. As most universities require anywhere between Rs. 80 lakh to Rs 1 crore for a graduation course, you should start by investing some amount in international markets every month, and after 3 -4 years, complete the additional amount required by a student loan. This will help you reduce the interest you pay and reduce the burden on your child when they start working. You can also apply for scholarships, where you can enroll in a program at relatively lower tuition fees based on your academic merits.

Invest in the right investment options: Once you have decided on a sum of money, it is time for you to identify the assets that can provide you with stable returns. You can opt for a combination of low-risk investment vehicles with varying returns, such as fixed-income products, low-yield funds and exchange-traded funds (ETFs). This would provide you with enough stability while allowing you to grow your money as you go. It is recommended to invest in the above in a ratio of 75:20:5 to be able to maximize your savings and accelerate your income so that you can finance education at the right time.

Find the right lender: In India, various banking institutions and non-bank finance companies (NBFCs) offer loans ranging from Rs 20 lakh to Rs 40 lakh at an interest rate of 12-14% per annum. However, the amount of interest can be significantly reduced if you have family in the United States who can act as a guarantor for the loan. You can look for banks that offer student bank loans at minimal interest rates and have partnered with global investment platforms to give you a variety of financing options within the same company. These banks can also facilitate remittances overseas with minimal paperwork through their partnership with major investment platforms.

Consider the impact of inflation: While saving and investing for future expenses, one of the most important factors to consider is inflation. Inflation and local currency depreciation can have a significant impact on your total fund generation. If you had planned to spend Rs 50 lakh on your study abroad and the cost swells to Rs 60 lakh in seven years, you might want to prepare for the extra Rs 10 lakh at the time of investment. Also, if the local currency depreciates at the same time, the overall expenses will become more expensive than you originally expected. Therefore, for fund planning, it is always a good idea to take inflation into account for accurate calculations.

Here are some revolutionary ways to invest in your education abroad.

education abroad

start early: If you are looking to study abroad for your degree, you may want to start at least 6-7 years before the year of admission. If the cost of your degree is Rs 80 lakh, you can invest Rs 55,000 every month for the next 7 years at an annualized rate of 15%. This strategy works better than investing in a lump sum and expecting it to grow, as the amount can be subject to a variety of currency fluctuations and inflationary tendencies.

Diversify your corpus: It is a natural tendency for Indians to save in real estate, gold and bank deposits to prepare for their future expenses. Although this is a proven strategy, it can take them years to collect a significant amount, especially for a child’s education. Instead, if the individual invests in gold bonds, real estate stocks, ETFs, and mutual funds, the time spent generating funds can be relatively less and profitable.

Choose the right platform: Although there may be a variety of investment experts and brokers in the industry, you need to choose an expert who can offer a wide variety of ETFs and stocks to invest in. As investments for large amounts can be expensive, choose platforms that offer the best subscriptions and student-friendly products. If you are looking to invest in the US, you may want to select a platform with partnerships with major US brokerages to help you invest seamlessly, while all the paperwork is taken care of by them. . As education investing is goal-driven, make sure the platform provides stocks of companies that you follow and understand so you can make the best trading decisions.

Personalized financing strategy: If you are a student or parent, you may want to approach overseas education funding strategically. Depending on your background and available financial aid, you can choose to fund the amount on your own or with the help of your family members.

A]Funding on its own: If you are funding your child’s education and you are the only family member earning money, you can use a combination of global investments and student loans to reduce the overall expense burden. If you plan ahead as suggested above, you can finance the amount beyond the initial investment with an education loan secured against 100% collateral. You can also take a bank loan first and choose to invest in global equities to pay off the loan before or at the end of the term.

B]Joint funding with family members: If you are lucky enough to have co-financing for your studies, you can benefit from personal loans from family members to pay for your studies abroad. In such cases, you can pay the tuition in a lump sum and get around 3-4% discounts from universities to pay the tuition in one lump sum. Plus, you can invest in high-performing global stocks to slowly repay your family members with ease after graduation.

The author is co-founder and co-CEO of Stockal

(Disclaimer: The views expressed are those of the author and Outlook Money does not necessarily endorse them. Outlook Money will not be liable for any damages caused to any person/organization directly or indirectly.)


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