SIP is always going to be better than an EMI: Deepak Shenoy of Capitalmind Mutual Fund

When it comes to securing your child’s future, one of the most critical financial goals is funding their higher education and for this, the path you choose — whether systematic investments (SIPs) or education loans with EMIs — can make a big difference but to simply put, a SIP is always going to be better than an EMI is what Deepak Shenoy of Capitalmind Mutual Fund says.

A mutual fund SIP helps in building wealth gradually through compounding while keeping you debt-free. An EMI, on the other hand, repays a loan, often with high interest putting financial pressure on you or your child for years to come.



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Saving for your child’s education isn’t just about meeting expenses, it’s about ensuring they begin their careers without financial debt.

Shenoy posted on social media platform X which said, “Saving for your kids' education is primarily to ensure you don't saddle them with debt when they start their careers. A foreign education should assume that the child comes back to India after and will have to work in India.”

Shenoy further adds that when planning for a foreign education is the long-held assumption that studying abroad will automatically lead to permanent settlement. While this may have been easier in the past, it won’t last now..

In India, there is no personal bankruptcy law which means that if your child takes a loan and is unable to repay it, the liability falls back on you. Bankers can continue recovery efforts for years,Shenoy further said.

This came in response to a user who mentioned about a distressed call where a student has taken about Rs 70 lakh ($80K) debt at 12% to get a master's degree in a small college in the US and the problem is the job scene in IT is bad, especially so for foreign students and payments on the loan are starting soon.

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The user urged students and parents to be cautious in borrowing heavily to pursue degrees abroad as borrowing heavily to pursue degrees in India is unwise too.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)