Alright, so you finally decided to look into this. Great!

Investment Planning for child is crucial for every parent.  There are various stages in child’s development where we need money Day care, Preschool, High school, higher education, etc. The big one is Marriage!

Most parents are under the impression that financial planning for child is a cumbersome task which involves a lot of  planning and that involves all of these different stages. And the simple answer is ‘No‘, unlike any other financial planning options this one is not that time-consuming and tough.

The most important part of child investment plan is to cover Education. Every parent want their child to be on top of world, which is fine! Right from preschool till higher studies, parents need to save money to fund their child.

But saving money is not an easy task, the most contributing and dominating factor is Inflation which reduces the purchasing power e.g what you can buy for 5 lakhs today will cost you 10 lakhs after say 10 years. Regular increase in tuition fees, educational expenses, medical expenses with rising inflation make situation worse.

So, How can you beat this Inflation?

Well, be regular, disciplined and focused on your objectives with long-term plan. Remember, the sooner you start, better  you make.

Here are some tips to help you get started:

Start Early:

Investing early with a  long-term view has benefits like  you can start with small amounts because you have a longer period in your hand.

Equity:

It is a proven fact that equities can outperform over other investments in long run. Investment in some blue-chip companies with long-term view, will sure do the magic. There is a market risk associated with equities but if you are a long-term investor this shouldn’t affect you.

Insurance:

Though Insurance is not an investment, this is must to have kind of thing in any child investment plan. Pure insurance i.e. term insurance is most recommended.

Don’t go for any child specific insurance plans as they are very expensive. The actual amount which is invested in such plans is very less (after deducting premium, commissions and administrative charges) and even after completing the term you may not get the expected returns. Remember – Insurance  is for securing your future in case of an any unfortunate event, so go with purpose.

Mutual Funds:

Mutual funds is one of the good option for accumulating wealth for child’s future needs (education or marriage). Invest through SIP in equity funds, specially in mid-cap or multi-cap for longer term. Mutual funds can definitely help you to achieve your target amount for this specific goal. Be regular and disciplined with your investments, even your small (regular) contributions can offer descent rewards. Do consider your financial requirements and investor profile before investing.

Sukanya Samriddhi Yojna (SSY):

This is one of the good option to invest for your girl child’s future. This is a government backed savings scheme for the welfare of girl child. It can be opened by parents of a girl child below the age of 10 years. The scheme has a tenure until the girl child attains the age of 21 years or until the girl child gets married, whichever is earlier.

You can find all information about SSY here.

Go Traditional:

Public Provident Fund (PPF) should be one of the important part of your child investment plan. The magic of “compounding returns” can beat any type of investment in long run. If you save regularly every year in PPF within  prescribed limit, say for 15 years, you can get an awesome amount which can easily fund your child higher education goal. Simple, safe and yet best option which can help you with your goal.

Gold:

Investing in Gold could not only help to get some more returns but also add a hedging factor to your portfolio/investments. You can invest through ETF’ or Gold mutual fund, which is safe option. Keep your investment in  gold up to 8-10% of your total investment.

Open a Child Saving Account:

As a custom or tradition parents/relatives sometimes give money to child either as a pocket-money or on occasion. Deposit that money in child own account not only helps you but your child can also learn the habit of to saving.

Don’t  buy piggy banks 🙂 That money is like taken for granted money and we use it if we run out of cash in a situation.

As raising the child needs patience, sacrifices over long years so does child investment planning. Eventually, both will fulfill your expectations.

Good Luck!