Choosing your dream school in a foreign country can truly be a very enriching experience that cannot be summed up in words. Afterall, good quality education and experience can take you forward leaps and bounds. However, this is not an easy to tackle topic, neither is it impossible so as to give up your dream.
Here, let us take an example of Raj. After completing his bachelor’s, Raj was planning to study abroad in 2025 for two years. After selecting the country to move to, he and his father sat down to calculate the finances they might have to cater to. They came up with following list:
|20,000 (One Time Cost)
|1,500 (One Time Cost)
|37,000 +51,000 (One Time Cost)
|30-40 Lakhs Per Year
|1,000 (One Time Cost)
|30,000 (One Time Cost)
|Cost of living for a year
|Total Year 1
|Considering both the years
Now Raj and his father faced a very difficult question. From where will they arrange such a huge corpus of money?
To avoid such a situation, here is a quick and crisp guide as to how you can see the world beyond:
– Create a Budget
Establishing a huge fund in one or two months is quite a challenging job. Knowing where you are financially in terms of paying for your education is of primary importance. List down the sources of these funds i.e. loans and scholarships. The budgeting will help you narrow down your choice of degree, college, and country. A daily, weekly, or monthly budget will enable you to estimate your outlays accurately.
It is also a good idea to familiarize yourself with the currency exchange rates and compare them with your budget.
– Awareness regarding Educational loan
There are plenty of such loans available nowadays. One can also grab tax benefits in such loans. For some, this can be a better way of spending money on education rather than investing parent’s savings.
|Name Of Bank
|Rate Of Interest for Education loan
|Bank Of Baroda
|11.15% to 11.50%
|11.25% to 12.35%
|Starting from 9.50% (Preferential rates as per the college or the university.)
|Kotak Mahindra Bank
|Up to 16%
– Government schemes
You can check out the central and state governments’ schemes to fund overseas education. The Indian government on its own and in collaboration with many international organizations and universities offers scholarships for study abroad programs.
– Student Subsidies
Student subsidies are often overlooked but can significantly contribute to your financial well-being. These subsidies are available for international students and can leave extra funds in your bank account.
– Investing in foreign assets
There is flexibility to invest in multi-currency stocks and ETFs, which can help you earn in dollars. Thus, for people interested in travelling abroad, investments in dollar products are a potential solution to combat depreciation pain points.
– Systematic Investment Plans
SIP is a process that requires the person to invest a certain pre-determined amount in a specific mutual fund scheme regularly – weekly, monthly, quarterly etc. The major benefits of a SIP are that the regular payments are easy on the pocket and your investment is managed expertly. Over some time, these small amounts add up to a sizeable fund that allows you to pursue your educational dreams.
This option is ideal for working people who wish to pursue higher studies in a foreign university. However, the number of years at disposal is key to determining if this way of funding will work effectively.
– Starting Investments Early
It is never too early to start investing. When you have a longer time horizon to arrange for the funds, you can plan for investing in products like Equity oriented Mutual Funds, where the investments earn higher returns and are generally safe for longer time horizon.
The example that we saw above where Raj had to arrange the funds of ₹120 lakhs. Let us look at various scenarios If Raj had started his investments earlier for the plan:
|Year of Start of Investments
|Year of goal
|Monthly amount needed by SIP
|Lump sum amount needed
If Raj starts his investments with 2 years in hand, he would have to invest approx. ₹4.5 lacs per month or ₹101 lacs in lump sum, that too in relatively safer instruments, let’s say in mix of Debt and Hybrid funds with returns up to 9%. On the other hand, if Raj had started SIP or lump sum investments earlier for the goal, then he would be making significant savings since the longer time horizon allow him to invest in relatively riskier Equity oriented funds earning up to 13% returns.
Studying abroad is one the most crucial decision one takes not only in terms of the perception of education but personally as well. Thus, Education is a necessity and not just a luxury. We at RichVik Wealth understand that and plan scientifically the educational goals for clients and their children so that they can make the most of their optimal capacity and go for the highest quality education they deserve.
To understand more on the topic as well as to start investments please feel free to contact us:
The article is authored by Ms. Preksha Chaudhari from Team RichVik