As parents, we strive to provide our children with the best opportunities in life, ensuring they have a bright and prosperous future. A crucial aspect of this responsibility is making wise financial decisions that will support their dreams and aspirations. Investing for your child’s future goes beyond merely saving money it involves strategic planning, careful consideration of financial goals, and choosing the right investment avenues to maximize growth and minimize risk.

In this article, we will explore effective strategies and investment options tailored to secure your child’s future. Here’s a comprehensive guide on how to invest money to safeguard your child’s future:

1. Start Early, Benefit More:

Time is your biggest ally when investing for your child’s future. The earlier you start, the longer time your investments have to grow. Even small amounts invested regularly can accumulate significantly over time due to the power of compounding.

Let’s Consider Mr. Sohan as an example. He and his wife have a 15-year-old son named Arjun, for whom they wish to invest in future education. To determine the financial requirements, they recently calculated that they would need a total of ₹50 Lakhs when he would turn 18. Now, they are confronted with a critical question: how can they secure such a substantial corpus of funds?

To avoid such situation, here is a quick guide on how starting early investment can be beneficial for them.

So, we saw above where Sohan had to arrange the funds of ₹50 lakhs for his child. Let us look at various scenarios if Sohan had started his investments earlier for the plan:

When Mr. Sohan starts his investments with 3 years in hand, he would have to invest approx. ₹1,22,600 per month or ₹39,70,000 lakhs in lump sum, that too in relatively safer instruments, let’s say in mix of Debt and Hybrid funds with returns up to 8%.

On the other hand, if Sohan had started SIP or lump sum investments earlier for the goal, then he would be making significant savings since the longer time horizon allow him to invest in relatively riskier Equity oriented funds earning up to 13% returns.

2. Understand Your Goals:

Before diving into investments, outline your financial goals. Consider the following:

– Education: College tuition fees, extracurricular activities, and other educational expenses.

– Life Events: Wedding, purchasing a first home, or starting a business.

– Long-Term Security: Retirement funds for your child. Having clear goals helps in choosing the right investment vehicles and staying focused on your investment strategy.

3. Choose the Right Investment Vehicles:

There are several investment options suited for securing a child’s future:

– Mutual Funds: Diversified mutual funds offer a balanced approach, spreading risk across various asset classes. They are managed by professionals who make investment decisions on your behalf.

– Stocks and Bonds: For long-term goals, stocks offer higher growth potential, while bonds provide stability and income. A mix of both can balance risk and reward according to your risk tolerance.

4. Consider Risk and Return:

Evaluate your risk tolerance carefully. Investments with higher potential returns often come with higher risk. Balance your portfolio based on your comfort level and the timeline for needing the funds.

5. Regular Monitoring and Adjustment:

Periodically review your investment portfolio to ensure it aligns with your goals and risk tolerance. As your child grows older, adjust your investments accordingly to meet changing needs and circumstances.

6. Consult with Financial Advisors:

Seek guidance from a certified financial advisor to create a tailored investment plan. They can help optimize your investments, considering tax implications and market conditions.

7. Stay Informed:

Keep yourself updated on financial trends and economic developments. Being informed will help you make informed decisions and navigate through changing market conditions.

Conclusion:

Investing wisely for your child’s future requires careful planning, informed decision-making, and ongoing management. By starting early, diversifying your investments, and seeking professional advice, when necessary, you can build a secure financial foundation for your child. Remember, the key to successful investing is not just about making money but ensuring that your child’s future is financially secure and full of opportunities.

We at RichVik, also guide the clients throughout their investment journey to fulfil their financial goals.

To understand more on the topic as well as to start investments please feel free to contact us:

Phone: +91-9324609115

E-mail: team@richvikwealth.in

The article is authored by Mr. Kaustubh Parmar from Team RichVik.