Education is one of the keys to a child’s future. Realizing children’s dreams through the best education that you can afford is an investment that money cannot buy.

Choosing an investment is an important step in preparing children’s education funds. This step will determine whether your education fund target can be achieved or not.

Place for investing your children’s education fund: If you are planning to save for children’s educational needs, you should start now and avoid any kind of delay before it’s too late. The cost of education is increasing at a much faster rate each year.

Therefore, you need to plan your best investment for your children’s education in the future. There are four alternatives that you can choose to use as an investment in your child’s education. Adjust this selection with your financial condition as a parent.

#1 Education Saving

The first investment for children’s education funds is children’s education savings. Education savings, or other term savings plans, are included in term savings which are financial products. This is the choice most parents choose.

This deposit saving usually ups to more than 2 years. The principle is that you will deposit an amount of money according to what you choose every month regularly until the due date ends.

However, if you look at the benefits, the interest in education savings is only 2% -3% each year, so it is less profitable for long-term investment. The cost of education continues to increase every year, reaching 10% -15%.

#2 Deposit

Another safe investment that many parents choose is a deposit. A deposit is a product of a bank where deposits and withdrawals can only be made at certain times according to the agreement of the depositor and the bank.

Deposits are usually used to save money for the long term because they cannot be withdrawn at any time. The deposit period depends on the bank, but generally ranges from 1 month, 3 months, 6 months, or 1 year.

Deposits have a slightly higher interest rate than savings, around 4% -6% each year. The interest earned in the following month will be added to the deposit funds so that each month the funds and deposit interest increase immediately.

However, like savings, deposits are still not enough to be used as an investment in long-term education funds because interest rates are between 4% -6%.

#3 Mutual Funds

Mutual funds often being the best choice of alternative investment in children’s education funds because they are quite safe. Mutual funds are an investment instrument that is a capital management pattern for a group of investors to invest without having to bother with investment instruments available in the market.

In this investment, you can choose to use it in the short or long term. There are various types of mutual funds that you can choose to invest in, depending on the investment risk profile you have and the time. For those of you who are quite conservative, you can choose mutual funds with fixed income or mixed mutual funds. Meanwhile, for those of you who are more adventurous, you can choose equity funds.

Another advantage of mutual funds is high liquidity since this investment can be cashed or sold at any time based on the Net Asset Value (NAV) price at the time of sale.

#4 Gold

Gold is also an investment that you can choose to prepare children’s education. Gold investment is highly recommended if you have financial goals for a period of 3 to 6 years. You can also buy gold with low capital, making it suitable for those of you who still have a lot of time and are just starting to invest in education funds.

When you already have deposits or savings in gold, you can sell or pawn it to be used as a children’s education fee in the future.

Starting early in investing for your children’s education will stabilize your financial c from now to the future. There are many other investment options that you can choose for your child’s education. Adjust everything based on your financial conditions as parents.

May 9, 2021

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