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Child's Future
Child's Future
Most parents save for meeting various needs of their children. However it is important to understand that savings alone will not suffice. It is vital to save an appropriate sum of money and invest it systematically in suitable investment avenues for it to become beneficial. Selecting an ideal portfolio mix of equity, debt, gold is a daunting task for most investors. Furthermore, the investment options & strategy depends upon the age of the child. For instance, an investment plan for a child in age group of 3-4 years will vary for those in the group of 15-16 years.
Why Do You Need To Plan?
- Evaluating your child's future needs, and working towards chasing those need based goals. We also help you forecast the expenses that may arise in future
- Beginning the process of saving and investing early. This will enable you to create an adequate corpus for the fulfillment of your child's desires and ambitions
- The financial decisions will determine your asset allocation and portfolio mix which will be backed by your risk tolerance level and risk appetite
- Saving for other priorities during various stages of life as well
- Help in maintaining the right product mix for the best returns
- Maintaining adequate insurance cover to cater to expenses of children which may arise due to unfortunate and untimely demise of the earning member
- Ensuring to keep insurance and investments separate
How To Plan Right
- As with every investment objective, you need to start early. With the on-going upward trend in education expenses, the earlier you start planning out for your kid’s future, the better
- Secondly, get the goal amount right. If you need 20 Lacs in next 15 years, plan it accordingly. It may not be possible to forecast what field your child will take up in the future but you can set a practical estimate towards the desired amount
- Don’t dig into your savings during any stage of this planning process. Your retirement fund is of utmost importance and should be treated so
- Increase the SIP amount every year to reduce the requirement. Make it as point to increase the SIP amount with the annual increase in your income
- Since you have a longer time horizon to plan for, investing mainly in growth assets is preferred. You can put 80% of your investments in equity or balanced funds
- Invest as per your risk appetite- if high then invest in stocks & equity funds, hybrid and balanced funds for medium risk and PPF or other tax free options for low risks
- For parents with teenaged children, the investment plan should focus on capital appreciation. Since the goal amount is just few years away, the equity exposure should not be more than 10-15%
Points To Remember:
- For those parents whose children are about to join a college or to start their higher education but are short of funds, education loan comes to the rescue. But it is advisable to only go for loan when you want to bridge the gap between your savings and actual required amount
- Create a separate portfolio for your child’s needs. Put in savings in the desired portfolio as per needs for education costs that may arise in the short, medium and long term
- The key factor in ensuring a proper allocation of the investments are in the number of years left for achieving the set goals
- Get an adequate life insurance cover so that any unfortunate event doesn’t leave your children with an unsure future
- Plan your investments with diversified mutual fund schemes. Start the SIP with a right mix of large-cap and mid-cap funds while increasing the SIP amount annually
- Do not disturb the savings created for your child for any other requirement than what it is created for. Your child deserves the best and do not let anything deter you from the path of fulfilling your child’s dreams