How to invest until now remains one of the topics sought by many people, one of its goals is to prepare child education funds. How not, according to the data from the Central Statistical Office (BPS), it is known that children’s education costs are increasing every year, which is around 10% to 15%.
This is because the education sector experiences inflation reaching 3.81% in particular his for the base money. Little wonder, then, that child education costs are still one of the largest expenditures for many communities to date. Taking these conditions into consideration, determining the most effective strategy of how to invest is also considered a solution that needs to be undertaken by parents in the present age.
How to Invest in Preparing for Children’s Education Expenses
Tips on managing finances for future investments
Have a decent life in the future, including one capable of financing costs A child’s education to the college bench must be a dream for every parent. Therefore, managing finances wisely and appropriately as needed as well as financial goals is also a first step that parents must take from now on. There are some tips on managing finance yes you can apply it as a form of investment in the future. The first tip is, set the expenditure budget every month.
- Make the financial planning needed and don’t forget to also make the posts finance in clear and detail. Because, that way you can figure out the priority scale of needs from very important to not very important.
- The second tip is to set up financial income and expenditure records as evaluate material personal breast milk at the end of the month. Creating a record of financial flows can also help you to find out if your monthly expenditure is in line with the financial planning already made.
- In addition, you can also set aside a small portion of the salary earned every his parents to be allocated to investment instruments. In general, the ideal allocation to investment is as much as 10% of revenue.
Well, in order to remain consistent with allocating some of the revenue for investment, You’d better do this at the beginning when you just get a paycheck instead of waiting for the rest of the payday.
Strategies on how to invest for children’s education expenses
The way each person invests may vary depending on the purpose of financing unlucky individual investors. However, if you are parents who want to invest in preparing for future child education funds, there are at least two main strategies to watch out for.
- Select investment instruments according to risk profile
In investing activities, select yan instrumentsg precisely according to the risk profile is a mandatory strategy that needs to be undertaken to minimize potential losses. Yes, this is because everyone definitely has different levels of tolerance in the face of fluctuations in investment value in the capital market. There are some people who can stay relaxed even though the value of investment is on the decline, but there are also some people who are so frantic in the face of the condition that they directly choose to sell their investment assets. Well, knowing which risk profile you have, this will help you greatly in determining which investment instrument is judged to be the most appropriate.
- Determine investment period
Determining the duration of the investment also becomes strategi other ways of investing that are no less important for you to think about. The reason is, knowing how long you will invest in collecting child education costs, this will help you in choosing the investment instrument that makes it most possible to realize that goal. The shorter the investment period (under a year to three years), then you can choose instruments that have low value volatility and stable yield imbalances such as money market depreciation, deposits, or state bonds such as ORI, Sukuk, etc. However, for the medium or long term (over five years), you can more flexibly choose investment instruments. Can be on instruments with r volatilityas low as previously mentioned, or as high as stocks or stock reps.
Recognize risk profiles before beginning how to invest
Every investor definitely has a risk profile each. Therefore, knowing the risk profile before embarking on investment is also very important. Risk profiles themselves are divided into three types of types; Conservative, Moderate and Aggressive.
Conservative risk profile is type of investor tends to fear speculation, wants safe investment, wants a stable rate of return, and easily panics when the value of the principal investment decreases due to price fluctuations. Therefore, investors with this kind of characteristic prefer investments with low risk levels such as e.g. money market recessions, deposits, gold and precious metals. However, since the risk level is low, the rate of return or return that conservative investors can produce also tends to be smaller when compared to stock investments.
Investors with moderate risk profiles generally more is bold compared to the conservative type and generally has medium-term financial goals. This type of investor has a level of tolerance that is bold enough to risk playing in a more fluctuating market to get a big return. A selectable investment instrument is a mixed reputation. Such investment instruments return is considerable, but the risk is not as high as stock investment.
Aggressive-type investors who have ambition to get “giant fish”. This type of investor is usually very bold in taking the risk of losses in investing. Its tolerance for the decline in investment value is also higher. Therefore, stock instruments are considered to be the most appropriate for investors who have an aggressive risk profile.
For profit the investment landscape continues to grow and can be a new source of income for owners, so you could consider circulating those benefits to the business sector. However, in order for the business pioneering process to proceed smoothly, it is advisable to choose a business sector that does have promising prospects not just for the next year or two, but for the long term.