Education today has become a costly affair and only early planning and regular saving can help parents to give wings to their child’s dream career. Building a strong portfolio consisting of best shares to invest is one of the best way to do this.
Every parent desires to give the best education to their children. Remember the scene from Amir Khan’s blockbuster movie 3 Idiots where a father proclaims “Mera beta bada hokar engineer banega (My son will become an engineer when he grows up)”, the moment his little son is born?
In reality, though many aspirations just remain aspirations as many parents are actually unable to afford the high costs of professional education. Fees for professional courses like engineering, medicine, and MBA have touched the sky over the last few years.
Let’s take a detailed look at the rising costs of professional education costs in India:
Given the high education costs today, many parents are often clueless about the best way to secure their child’s future by providing them a good education. That is why it is important to build a huge corpus for a child’s education by choosing the best shares to invest in.
So how does one choose the best shares to invest in their kid’s education?
Here are a few pointers which can help you to find the best shares to invest:
Look for companies with high earnings growth
Companies with a consistent history of good earnings growth over a prolonged period of time can be considered as best shares to invest in for long term wealth creation. Some examples of such companies which have created huge wealth for investors in the past include TCS, Maruti Suzuki, and Bajaj Finance.
Look for professionally well-managed companies
Far-Sighted management can propel the business to new heights of success. Hence while choosing the best shares to invest it is very important to check the management’s pedigree.
Check for the company’s relative strength in industry
While choosing the best shares to invest it is essential to evaluate the company’s relative strength in the sector and how it is performs as compared to its peers.
Go for companies which are good dividend paymasters
Stock market experts consider stocks of companies that pay regular dividends as one of the best stocks to invest as it reflects a healthy picture of the company’s earnings and financial stability.
Check the company’s Price to Earnings Ratio
Price to Earnings Ratio (P/E) is an important factor to evaluate whether the stock is overvalued or undervalued. A stock which is trading at a higher P/E ratio reveals that investors are willing to pay a higher price for the stock. On the other hand, a stock which is trading at a lower P/E ratio means it is available at an attractive valuation. To know whether the stock is cheap or overvalued in comparison with its competitors, it is advisable to evaluate the P/E ratio of the company with the P/E ratio of the industry in which it is operating.
To summarize one can build a huge corpus to fund their child’s education by choosing the best shares to invest. Traditional investments like bank FD and debt products offer low returns which are inadequate considering the huge inflation in education costs.
Read more: How Long-term investing helps create life-changing wealth – TOI.