Step-up SIP: Your child's entire education is free, yet you'll save ₹50 lakh... This 'plan' will say goodbye to tension..
Parents spend day and night worrying about their children's education. Rising school fees and higher education also plague them. CA Nitin Kaushik has suggested a great way to shake off this stress. He posted on the social media platform X. In this post, Nitin Kaushik explained a SIP scheme. This plan can cover your child's education expenses. Furthermore, you can have over ₹50 lakh saved by the time your child turns 22. To do this, you need to start a monthly SIP of ₹10,000 from the child's birth. Increase this amount by 10% every year for 10 years. Stop contributions after 10 years. Then, withdraw ₹25,000 every month from the child's age to 22. All this is possible without any education loan.
Nitin Kaushik explained that 99% of parents spend lakhs of rupees on school fees without any planning. He raised the question, "What if a 10-year SIP could fund your child's education virtually free... and still leave lakhs for their dreams?" He suggested a step-up SIP strategy. This strategy can replace expensive education loans. It's a long-term financial plan.
How does the scheme work?
The scheme works like this: Start a SIP of Rs. 10,000 per month when your child is born. Increase the SIP amount by 10% every year for the next 10 years. Stop contributing to the SIP after 10 years. Withdraw Rs. 25,000 per month from the time your child turns 10 until they turn 22. This money will be used for the child's fees. This scheme assumes a 12% CAGR (compound annual growth rate).
What's the math?
According to Kaushik's calculations, you'll invest a total of ₹19.12 lakh over 10 years. By then, this amount will grow to ₹32.69 lakh. Over the next 12 years, you'll withdraw a total of ₹36 lakh for education, leaving ₹51 lakh remaining in your account. He said, "Compounding works even when you withdraw money." This means the remaining money keeps growing. This will keep the money growing even during repayment.
Stunning Results
Compare this plan to an education loan. The EMI for an education loan of ₹36 lakh at an interest rate of 11% for 10 years would be approximately ₹50,000 per month. This is double the amount withdrawn through a SIP. It also carries a significant interest burden. Kaushik said this strategy matches your income growth. He says, "Start with Rs 10,000 a month and by the 10th year, you'll be investing Rs 2.8 lakh annually, which is in line with promotions and salary increases."
He also has some suggestions. Use low-cost index funds. Always maintain some liquidity for emergencies. Review your progress annually. He concludes, "A disciplined, step-up SIP for 10 years can do more than a decade over time." It's a stress-free and smart way to compound.
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