One of the major responsibilities of parents is to cater to the education expenses of their child as he gradually grows up. As time is passing, the cost of education is rising; so it becomes necessary to plan a budget accordingly. One of the best way is to get an education loan so that your child can get the best education. Education loan for higher education is easily available at your nearby bank. But it should be the last option since one has to repay the loan in the initial years of employment which may affect other investments.
One of the safest option can be a PPF account. You can deposit up to Rs 1.50 lakhs per annum.The amount can be invested in one go or monthly. The parents can claim a tax deduction against this amount. Further, the interest rate is fairly good. The biggest advantage is that the investment is completely secure. Also, the interest is tax free, which makes the effective returns even higher than the usual interest of 8.70 percent. By the time the child is 15 years old, you will have accumulated about Rs 46.75 lakhs.
Another option can be opening a recurring deposit with a bank. Interest would be around 8% but would be taxable. You can open a three or five year recurring deposit and contribute regularly to it.
Another option can be a life insurance policy too. Returns would be lower in this case, but provides coverage against life risk.
Parents should be aware of the rising education expenses and must start their savings from before in order to gift a secured future to their children.
Source: http://goo.gl/T3Rwsr
