WF: What consumer insights led you to create the new Child’s Education Calculator?

Ankur: Today, education for kids is a critical goal that our customers look at when planning for their kids’ future, and hence driving their need to invest. With both domestic and international curriculum available, it is difficult for parents to understand what is the approximate amount needed if they were to choose either option.

Though most parents prioritize saving and investing for their child’s education, they often miss on starting early and frequently end up with inadequate funds. The Child’s Education Calculator is an exhaustive tool that helps to bridge this gap and facilitate parents to plan better.

Click here to access L&T MF’s Child Education Calculator

WF: Can you take us through the contours of your new Child’s Education Calculator? How is it different from other financial planning calculators in the market?

Ankur: Our Child’s Education Calculator is focused on better understanding of the amount parents need to save for their children in any of the mainstream careers, for both domestic and international education. Most calculators look at parents being aware of what the current cost for any stream of education today, and on that basis arrive at the value of SIP or lump sum they would need today to reach their goal.

Our Calculator one the other hand, makes it extremely easy to use. You only need to select a career your child would be interested in and choose whether they would pursue it locally or internationally. The calculator then gives you the amount you would need to save through either lump sum, or SIP based on the number of years available to the goal.

All major courses available today are pre-populated and so it becomes very convenient to calculate and investors do not need to search for the latest information on costs for each course. In case a parent wishes to choose a career for their child which is not part of the pre-populated list, then they can select their own preference and fill out the required details.

A report is sent via email as a ready reference to the investor to help them make the right decision.

WF: What kind of a report can investors get from this Calculator? Is there a fee to be paid for getting this report?

Ankur: Investors will be able to compare the future value of their lump sum investment and the ‘proposed’ monthly savings along with future value of the cost of the chosen course fees. They can easily see the shortfall (if any) at a glance in their current planning and make use of the additional monthly investment option to fulfil the gap.

Using this calculator and obtaining reports from it is absolutely free of cost for all!

WF: Do you have a specific Child Savings Fund that investors can invest in, after they complete this planning exercise? Are there plans to launch one?

Ankur: Currently we do not have any specific Child Savings Fund that an investor can invest in, but we believe that child’s education savings can be done through any of our open ended schemes based on expected returns.

In a child savings fund, the asset allocation is generally pre-fixed and all customers would need to be invested in the same asset allocation. With an open ended fund, each investor can customise the allocation based on the returns they seek by selecting a combination of schemes as well as the time to their goal.

In most cases, customers are unaware of what kind of asset allocation they need for their investment. Hence customers seek the help of their financial advisor in making the right investments to achieve their goal. Our Calculator has been designed to trigger the need to save and the quantum of money to be saved. This then drives their behaviour and generates a need to invest.

WF: Many Child Savings Funds in the market tend to have a lock-in to encourage a long term horizon. Opinions among distributors are sharply divided on the lock-in aspect. What is your stance?

Ankur: Customers typically prefer flexibility when it comes to redemption and often they don’t want their money to be locked into a product, unless it is regulatory such as tax savings. The reason, we believe, is that it gives them some comfort that if things were to go wrong, they could always have access to their money.

We all know that wealth is created over long periods of time and so if customers stay invested for the long run, they tend to have a better experience. Now if there was a compulsion to stay locked-in over longer periods, their experience would be better than investments for shorter period of time. So in a sense both options have their merits and de-merits.

In today’s world of convenience and flexibility, we aim to give our customers better access to their money at any point in time, which is why open ended funds can win this argument. It’s also the reason why we believe that any of our open ended funds could be used to invest for their child’s education.

WF: How can distributors leverage your new calculator? Is there a registration process?

Ankur: The Calculator is a great tool to get the need for investing triggered. Education today is one of the most important goals for parents, and since it is generally considered as savings from a long term perspective, it helps inculcate a long term investment habit as well. In most cases people are not willing to sacrifice their current expenditure or lifestyle for future gratification. But when it comes to their child’s education for their children, parents are far more receptive.

The endeavour here is to position ourselves such that it helps our distributors to capture the mindshare of their customers and generate an instant “need” for investing.

There is no registration process required, but if the customer wishes to receive a detailed report on the investment amount, etc., they would need to provide their email address. The report is then sent on their email ID in a PDF format. If customers choose to visit and transact on our website, the last ARN captured in the folio would automatically get selected on inputting their existing folio number, and the due credit for that business will be given to that distributor.

Disclaimer: This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. This material provides general information and comparisons made (if any) are only for illustration purposes. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may or may not be realized or achieved. Neither this document nor the units of L&T Mutual Fund have been registered in any jurisdiction except India. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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