Becoming a parent is a fact of immense joy but also a challenging task. This is because you not only need to shoulder the responsibility of raising your child but also to meet their requirements for the future. Factors like marriage, higher education, capital investment, etc. require huge sums of money as a lump-sum amount. Thus, it is very important to invest in a child plan so that your child’s dreams are not left unfulfilled due to lack of financial support.
For Example, Your child wishes to pursue B.Tech from a good technical institute in India, say Manipal University. Currently for the four year programme the total fee (Tuition + Hostel) is ~25Lakhs. With current rate of inflation, in 15 years the fee is expected to be ~45Lakhs. About half the fee can be covered by educational loan. The average income parents who send their children to Private institutions is 7Lakhs. However, by investing a small amount of INR 7, 778 per month for the next 15 years in to a child plan offering ~8% returns will return an assured sum of 22.4 Lakhs i:e half the Fee required!
It is very important to understand the goal of investment in a Child Plan for the parents. This is necessary to plan the fund. For Example, Higher Education begins mostly at the age of 18 and average age for marriage is 24. The time to begin investment depends on the sum requirement as well as the savings available to spare. It is advisable to invest 40-50% of your savings into Children plans to ensure a safe future for them. If you are willing to invest less than 10,000 rupees a month, then the investment tenure must be minimum of 15 years before the requirement of the sum. On the other hand if you can invest more than 15,000 rupees a month then even 10 years could be sufficient.
Thus, investment in child plans is a secure as well as disciplined measure to empower your child’s future so that he/she may not have to make compromises with their dreams.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.