How To Invest For Your Child’s Future?

How To Invest For Your Child’s Future?

In the Article: Financial Planning for a Child’s Education, I have explained in very detail that how to invest for your child’s future?

The cost of living, education, assets and everything is rising year by year and that’s why it is necessary to plan your child’s financial future. Here are the few things that you should keep in mind while planning your child’s financial future.

01) Start Early: Well, I have make a list of 5 golden advises that you should follow for your child’s better financial future. However, if you ask me for the single most important advise than this should be the one. There is no other financial advise that is as effective as “Starting Early”.

This is because the Investment is a game of money and time both. You have to invest both money and time to make your investments grow like anything. And the Compound interest will only work on your money if you give more time to your Investments. So Start investing early for your child’s future.

02) Equity is the Best: I advise to start SIP in 2-3 good Equity Diversified Mutual Funds. This is because the Equity is the only asset class which gives you highest returns in the long run than any other asset class.

03) Teach Your Child the Basics of Financial Literacy: You have to teach your children the basics of Investing, Budgeting, Accounting & Personal Finance. This is because after all you are doing this for your child’s future only. And without Financial Literacy, your child won’t preserve and grow this wealth after you.

Motivate your child to read Personal Finance Books, Blogs, Websites, Magazines or watch Videos and listen to Audios.

04) Don’t be Greedy: Shift to Debt when you are near your Goals – Before 2-3 years from your Financial goals, simply shift your wealth from Equity Mutual funds to Debt mutual funds to preserve the profits.

05) Be Realistic: Set realistic goals. Expect realistic returns from the stock market. The stock market can give you anywhere between 15-20% compounded annual return. You can not except 50% compounded annual return from the stock market consistently.

06) Consider Inflation while setting Financial Goals: You have to consider the Inflation factor before setting your financial goals. This is because if today the higher education cost you 10 lakhs than after 20 years, it will be well over 50 Lakhs.

I hope that the above quick guide will help you to plan your child’s financial future.