How to fund child’s education: Take a loan or use own funds?

Keeping your accumulated savings invested and taking an education loan instead can benefit you. Photo: Alamy

Keeping your accumulated savings invested and taking an education loan instead can benefit you. Photo: Alamy

Any big-ticket spending requires you to either have the required funds in place or a financing option. When dealing with long-term financial goals, such as higher education of children, you have the advantage of planning much in advance. Here’s how you can go about the planning.

Start early

A lot of parents have an inclination to send their children abroad for higher education, at least at the post-graduate level, said Suresh Sadagopan, a certified financial planner and founder of Ladder 7 Financial Advisories. “In that case, the planning needs to start really early. They would need a horizon of at least 10-15 years. When we talk of international education at post-graduate level today, most likely it is not going to happen below ₹40 lakh,” he said.

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How do you work towards saving that amount? Prakash Praharaj, founder, Max Secure Financial Planners, said that the future cost of a particular course needs to be calculated taking into account at least 10% annual inflation. “Then calculate the current assets and investments accumulated for these goals. Then the remaining gap for the aimed amount is to be filled through monthly SIPs over the years,” he said.

Starting an SIP of ₹5,000-7,000 in an equity fund for 15 years and increasing it by 10-20% each year could help. However, Sadagopan said, given the fact that there are so many ongoing expenses these days, including other loans, it becomes difficult for parents to put aside a huge amount for the child’s post-graduation alone.

Consider taking loan

Even if you have been working on creating a higher education corpus, you need to consider taking an education loan. At present, the total expenses for higher education abroad could be in the range of ₹1 crore per child, Sadagopan said.

“A realistic thing that parents need to realise is that the child’s higher education is not their only goal. Retirement is also an important goal and they need to be aware of the fact that you can get a loan for all other requirements but not for retirement,” he said.

Own funds versus loan

But if someone has already accumulated the required amount, why should another repayment burden be taken on? The answer lies in two things, Praharaj said. “A cost benefit analysis suggests that taking an education loan and keeping the accumulated amount invested works in your favour. Moreover, it also helps in developing a sense of responsibility in the student. The realisation that a repayment has to be done by them keeps them focussed,” he said.

The math of keeping your accumulated savings invested and taking an education loan instead suggests that taking a loan results in significant benefits. For instance, if ₹1 crore is kept invested and an education loan for the same amount is taken, at the end of nine years, including the repayment holiday on the education loan, the net benefit could be around ₹87 lakh (see graph).

This includes the tax saved on repayment of loan. Borrowers of education loans can claim deduction on the interest paid, though not on the principal amount. Also, unlike in home loans, there is no limit to the amount that can be claimed as deduction.

Sadagopan said it is better that the parents keep the money with themselves and let the child take the loan. “In future if the child is struggling to find a job and pay back, you can step in to help at that point,” he said.

[“Source-livemint”]

Two smartphone apps for regulating a child’s smartphone and internet use

Family

The Family Link app for Android is shown. (Google)

If you want to supervise the online activity of your kids or teens who were given a smartphone this Christmas, you can install an app to control internet access, filter inappropriate websites and content, and block specific apps. Here’s a selection of some of the most comprehensive parental control apps on the market.

Qustodio

Qustodio’s parental control operates in a similar way, and provides a daily online activity report for each child. Device screen time limits can also be set for each child. With the free version of the app, you can only supervise one child on one device. Otherwise, the cost of the subscription fee depends on the number of kids and devices covered.

Xooloo Parents

This very comprehensive app also monitors kids’ online activity on different mobile devices. As an example, it can block an app after it has been used for a certain period of time, and the child is warned by a virtual coach when they are approaching the fixed limit. While the app itself is free, the cost of subscribing to the service starts at $2.99 a month and rises depending on the number of devices used by the children.

[“Source-ctvnews”]

Samsung Pay comes to Gear S3, use your Samsung smartwatch to make payments

Samsung Pay comes to Gear S3, use your Samsung smartwatch to make payments

Samsung has today made it possible to use the Gear S3 smartwatch with Samsung Pay, the company’s alternative contactless payment method to Android Pay and Apple Pay, in the UK.

  • What is Samsung Pay, how does it work and what banks are supported?

With Samsung Pay enabled on a Gear S3, it can be used to make payments on all contactless payment terminals, including Oyster terminals across the London travel network.

To enable Samsung Pay on the Gear S3, follow these simple steps:

  • Make sure your mobile device is compatible. The Gear S3 can be used with select Samsung phones, and all other Android smartphones running Android 4.4 KitKat or higher
  • Ensure you have the latest version of the Samsung Pay app installed on your mobile device
  • Register your credit or debit card and authenticate your ID
  • Set-up a security pin

To use the Gear S3 to make a payment, hold the watch with the face facing the payment terminal.

  • Samsung Pay now available in UK for Galaxy smartphone users
  • If you use Samsung Pay, you can check-out with Paypal now

Samsung Pay is already available to use with select Galaxysmartphones, but this marks the first time it can be used with one of Samsung’s smartwatches. Samsung hasn’t said if and when it will make it possible to use Samsung Pay with the Gear S2 or Gear S2Classic watches.

[“Source-pocket-lint”]

Boycotts And Buycotts: How We Use Money To Express Ourselves

Ivanka Trump’s brand has been the target of boycotts and “buycotts” in recent months, as Americans have been expressing their values with their wallets.

Mark Lennihan/AP

Americans have long expressed their political views with their wallets, but in recent months, this phenomenon has made national news. A campaign called #grabyourwallet has targeted brands affiliated with Donald Trump. And the Trump camp has responded in kind, with one of his closest aides encouraging people to support his daughter Ivanka’s brand.

Neeru Paharia is a researcher at Georgetown University, and she says this kind of economic activity can make us feel powerful.

“It seems like people are a little fed up and disillusioned with conventional political channels,” Paharia says. “In the absence of that legitimacy there has been sort of a rise in political consumerism.”

We might think that we use money mostly to satisfy economic needs, but Paharia has found in her research that we often aim to satisfy psychological ones — whether that means driving a fancy car to show off our social status, or buying coffee at the local shop instead of a chain to express our moral values.

But while we do use money to support causes we believe in, we are often selective about when we express those beliefs — and when we ignore them.

Hidden Brain is hosted by Shankar Vedantam and produced by Maggie Penman, Jennifer Schmidt, Rhaina Cohen, and Renee Klahr. Our supervising producer is Tara Boyle. You can follow us on Twitter @hiddenbrain, and listen for Hidden Brain stories each week on your local public radio station.

[“Source-npr”]