Secure Your Kid’s Future With Mutual Fund

A parent can invest in an equity oriented mutual fund in a staggered manner through SIP (Systematic Investment Plan). A parent can initiate this action as soon as a child is born so that there is adequate time for the investment to grow over a decade and more.?

Spotlight Desk

Updated on: 19 January 2023 1:25 pm

Samir Vora, CEO, Ocean Finvest

When we make education a priority, we give our children opportunities. As parents, we always want to provide the best education, for which we sacrifice our today so that the kid(s) future is secured. One of the ways to enable them is by ensuring there is adequate finances available to meet fess related requirement. While education loan is always an option, the better approach is to be prepared. For this purpose, a parent can invest in an equity oriented mutual fund in a staggered manner through SIP (Systematic Investment Plan). A parent can initiate this action as soon as a child is born so that there is adequate time for the investment to grow over a decade and more.?

Why Investing is Important?

Investing towards child’s higher education help children and their parents/guardians focus on careers without worrying about finances. But what is often forgotten is that life is uncertain. In the absence of a parent/guardian, such investments made will help take care of the education requirements. Mutual funds over the long term will help generate sufficient returns to help your child meet future needs to pursue the education they desire.

Now, let us understand this further through some well-known proverbs.

1.?? ?Slow and steady wins the race

Mutual funds powered by various advantages can help you build wealth and realize long-term financial goals. All of this becomes possible only when you adhere to financial discipline, remain patient with investments and finally allow the power of compounding to play out thereby helping you can reach new heights of fulfilling financial goals.

2.?? ?Actions Speak Louder Than Words

Sometimes we are satisfied by just saying that we will plan for the future, save, invest this much. All of these become meaningful only when it is implemented in the form of investments. So, instead of wasting time thinking of the best investment option, start a SIP in an equity oriented mutual fund.

3.?? ?Adversity and Loss Make a Man Wise

We gain wisdom faster under challenging times than in prosperous times. It is like after losing money in investments, we know which assets to avoid. It is rightly said adversity and loss makes a man wise. If you are investing towards the brighter future opportunities for your child, one of the ways can be through a mutual fund.

4.?? ?A Journey of a Thousand Miles Begins with a Single Step

What’s required is the will to invest. An idea about one’s monthly expenditure is the first step in understanding how much one can invest. The amount available over and above the monthly spending can be the starting point for investment. After this budgeting, you can start investing in your kid’s educational journey.
Know Your Numbers

1.?? ?If investing at the birth of a child?

Monthly SIP

Investment Period

Expected Return

Total Amount Invested

Wealth Generated

1,000

12%

? 2,16,000

? 5,49,439

?2.?? ?Planning for child’s college education

Monthly SIP

Investment Period

Expected Return

Total Amount Invested

Wealth Generated

1,000

12%

? 2,16,000

? 5,49,439

3.?? ?Planning till child’s retirement (60 Years)

Monthly SIP

Investment Period

Expected Return

Total Amount Invested

Wealth Generated

3,000

15%

21.60 Lakh

186.19 Crore

?4.?? ?Calculation of Loan Vs. SIP (If you want corpus at the age of 20)

Loan

At the age of 20

For 5 Years

Targeted Amount 25 Lakh

EMI ? 53,797

Interest Rate 10.55%

SIP

At the age of 10

For 10 Years

Targeted Amount 25 Lakh

SIP ? 11,159

Expected Return 12%

Bottom Line

As can be seen from the number above, investing through SIP in mutual funds over long term will ensure that your child gets the money at specified intervals. As a parent, it will ensure that your child’s future needs are met and they can fulfil their educational dreams as planned. So, investing in a SIP is a wise step for every parent who wishes financial security for their child.