Investment for Kid

Reader’s Query – How can I Invest Rs.3000 monthly for my Kid?

Well, there are so many financial products available for securing your child’s Financial Future. Out of these 2 commonly available financial products are Mutual Funds & Insurance Plans.

In my Opinion Mutual Funds are Best. Select 2 or 3 reputed Equity Diversified Mutual funds having a past record of Good Performance and start monthly SIP of Rs.1000 in each. I am assuming that your Kid is 3-10 years of age.

Once you start Investing in mutual funds, simply track the performance of each mutual fund every year or twice a year.

Tips -

- First of all calculate that for which purpose you want this fund and how many years are remaining for that event. Means you want this fund for your Child’s Education, his/her Marriage, developing a Business for him or for anything else. Once you decide it, count that how many years are remaining for that event?

- Expect 15-20% per Annum return from the Indian Equity in the long run (More than 5 years). So according this if you start investing Rs.3000 per month today than after 15 years when your child will really need this fund its value will be around Rs.3.36 Lakh at the rate of 15% per Annum return & Rs. 6.65 Lakh at the rate of 20% per Annum. And anything above this will be your Bonus.

Be Realistic and expect realistic returns. Don’t expect the corpus of Rs.1 Crore after 15 years by investing just Rs.3000 per month.

If you are not happy with this Corpus (Rs.3.36-6.65 Lakh) than from right now increase the SIP amount.

- When you are near your Goal (Means just 2-3 years before the Goal), Start shifting money from Equity to Debt mutual funds. Don’t think at that time that market is high and it will go more high. Don’t be over greedy. Your child’s future is more important here. It is advisable that near your goals, Debt is better than Equity.

- Another Financial product for your child is Insurance Plans. The only advantage of these products is that, if you die unfortunately than your child will get the desired amount as an Insurance. But Insurance products are associated with high administrative charges so I don’t prefer them.

So chose the financial product according to your comfort level and start investing for your Kid’s future.

Best of Luck…!!!