As a parent, it is more likely to find out ways through which you can provide a good financial grounding to your child. Definitely, parenting comes with a long list of responsibilities and planning their future well is one of the most crucial things above all. Also, it will help you prepare your family for the upcoming stages of your life. The best thing that you can possibly do is to think of their education, healthcare and their wedding too!
While you are planning about investment, always make your calculations depending on inflation. Another thumb rule for a successful investment is to set clear and specific goals. Lastly, you should start involving your children in age-appropriate money conversations. Teaching financial literacy to your kids will not just help them get a fair idea about saving, budgeting and responsible spending, but it will also give them clarity about their goals based on the current job market. Remember that it is never too early to start! Also, it is never too late either! So, start today if you haven’t thought of it so far!
Nothing is too little
Start investing whenever you can. No amount is small. It’s better if you can schedule it on a fixed date, and do it whenever you have a surplus fund in hand. You never know when and how a small effort that you have made is supposed to make that difference for you.
You need to understand that education is getting costly day by day, and if you haven’t saved anything yet, chances are that your children will be sacrificing a good higher education. Begin investing as soon as your child is born to fetch better returns in the long run.
Start by investing in moderately risky instruments and correct your investing decisions if you see any risky affairs. Also, you should be exploring various avenues of investments to grab the benefits of compounding. Starting with a SIP is a good idea, too!
Open a simple savings account
Yeah, it is that simple! If you haven’t thought about saving so far, it’s time for you to start today! Deposit a lump sum amount in your child’s savings account. Opening an account is now easier than ever! Also, this is going to encourage your kid to save. Give them gifts and teach them the importance of savings. All these small things will gradually turn into a habit that will serve your family in the long run.
Start today and review your fund at a regular interval
Since you are supposed to go on a long-term investment, it is important for you to review your child’s fund on a regular interval and do the rebalancing if needed. Based on the goals and the market scenario that comes up, adjust your investment from time to time. Strategize things depending on your child’s field of interest and future ambitions.
Purchasing a health plan is a new mandate!
A lot of people think that investing in health insurance is of no use unless they have experienced the hospital expenses themselves. Yes, good financial planning will always include your child’s health protection plan. Another important thing is to purchase a life insurance plan. All of these are going to save your family in the long run, most significantly during any kind of unfortunate events.
See for both short-term and long-term goals
While short-term goals usually include all the expenses that you are supposed to incur within the upcoming 1 or 2 years, long-term goals consist of University admission fees, a child’s marriage and more. Also, you should plan your child’s school fees as well as extracurricular activity fees to avoid monthly hassle. Make equity investments and moderate risky investments to fetch good returns that can probably accommodate your child’s education abroad and other long-term goals.
Consider withdrawal plans for your investments
Investing in your child’s financial security is going to be a really long affair. You are probably going to extend it up to 15 to 20 years or even more. Therefore, it is extremely necessary to ensure the instruments that you are investing in offer all the security that you expect. Apart from giving you a good return, you must consider the withdrawal provisions. Remember that an investment that can’t serve you during an emergency comes as a regret instead of a boon.
Always appoint a nominee to all the investments you make!
Appointing a nominee is something that we all tend to neglect. However, it is one of the most responsible moves that you should make. Appoint someone from your family who is reliable and responsible enough. This will help your child to avoid the hassle of withdrawing the money during any kind of unfortunate incident, particularly if the kid is a minor. Besides, you should discuss and brief your children about these investments so that they are at least aware of their whereabouts. Of course, this is important as it is never wise to keep it a secret, especially when you are keeping your hard-earned money for your little ones.
Investment programs you must know about!
Creating a diversified portfolio is extremely crucial. You can opt for SIPs, or invest in a Public Provident fund, where your money is going to be safe for a minimum of 15 years with a tax-free assured return. Also, if you have a girl child under 10 years of age, invest in government-sponsored schemes such as the Sukanya Samriddhi Yojana. Other investment plans include going for fixed deposits and recurring deposit schemes. You can also open a minor Demat account for your child.
Final thought:
Strong financial security is equal to a good life today. Always consider the risks before starting an investment. At the same time, you should think of diversifying your portfolio so that your risks are mitigated. This is because with big risks come big returns. Know that there’s no thumb rule to make money; it is always about proper strategies and a little bit of luck.
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