Edelweiss Mutual Funds CEO Radhika Gupta said that after 16 years, higher education in the US might cost Rs 10 crore, and so, she is saving an equivalent sum for her 2-year-old son.
Radhika Gupta breaks down numbers to prove her point
The lady boss even shared a breakdown of numbers on the social media platform ‘X’, factoring in inflation and currency depreciation, after some individuals disagreed with her cost projection for US higher education.
“I’ve got a bunch of baffled messages about how education can cost Rs 10 crore,” Gupta wrote on social media. “The math is simple.”
“We underestimate the impact of inflation when we do our financial planning, not just for education but even retirement. Always do the numbers and plan early!” the CEO said in her post, explaining how inflation and currency depreciation would massively raise education costs over the next two decades.
According to Radhika Gupta, higher education costs around Rs 2.5 crore in the US currently. Considering an inflation rate of 5% and a currency depreciation rate of 4% over the next 16 years, the cost for the same would be Rs 9.9 crore then.
Adding to her previous argument, she also advised how much one needs to invest in SIPs per month to reach this goal.
According to the Edelweiss boss, a goal of Rs 10 crore needs Rs 1.6 lakh a month from a working couple to invest in SIP. This will accumulate a total capital of Rs 3.5 crore over 18 years.
With the help of compounding magic, this amount will grow to Rs 10 crore (Rs 3.5 crore + Rs 6.5 crore interest) with a 12% expected return annually.
“Make a spreadsheet with 12% assumed returns and watch the magic. Btw, for the math feels who say inflation should be factored into currency depreciation, I am using USD education inflation not India :),” Gupta remarked.
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