In Edelweiss Mutual Funds MD and CEO Radhika Gupta’s view, higher education in the US after 16 years might cost Rs 10 crore against Rs 2.5 crore. To support her argument, she gave a complete breakdown of numbers factoring in inflation and currency depreciation.
Gupta took to the social media platform ‘X’ to say she is aiming to build a corpus of Rs 8 crore to Rs 10 crore for her son’s higher education. Her son’s current age is 2 years. Some ‘X’ users did not agree with her cost projection for US higher education, prompting the Edelweiss Mutual Funds MD to come up with some calculations.
Also read: Edelweiss CEO Radhika Gupta slams report on ‘inexperienced’ Fund Managers, says ‘analysis is terribly biased’
Highlighting an important lesson in financial planning, she said people tend to underestimate the inflationary impact on their savings.
“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!” Gupta said in her post explaining how inflation and currency depreciation would result in a massive rise in education costs over the next two decades.
According to her, 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 higher education cost would be Rs 9.9 crore then.
I’ve got a bunch of baffled messages about how education can cost 10 cr.
The math is simple
Current 4 US education: 2.5 cr
Inflation: 5%
Currency depreciation: 4%
Time: 16 years2.5 * (1.09^16) = 9.9 cr
We underestimate the impact of inflation when we do our financial…
— Radhika Gupta (@iRadhikaGupta) May 20, 2025
Adding to her previous argument, she shared one more insight on how much one needs to invest in SIPs per month to reach this goal.
Her calculation says that this goal of Rs 10 crore needs Rs 1.6 lakh a month from a working couple to invest in SIP. This will help put 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 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 said.
One more insight:
What’s the amount we are SIPping for this goal? 1.6L a month as a working couple.
What’s the total capital we will put over 18Y? 3.5 cr.
Where is the balance 6.5cr coming from? Time and compounding.
Make a spreadsheet with 12% assumed returns and watch… pic.twitter.com/235DLihusJ
— Radhika Gupta (@iRadhikaGupta) May 20, 2025