No Child's Play

Picking the best investment options to secure your child’s future is not easy. Here’s how you can go about it

- Priyadarshini Maji

Seeing your children grow up healthy and happy is one of the best experiences of life. But too many of us have seen them struggle, weighed down by money problems or personal trauma such as a parent’s death. A recent study by Aviva Life says that Indians are better dreamers but poor planners; out of 100, only 24 people plan in India and 81 per cent of Indian parents do not even know what will be the cost of higher education in future. In case you are not sitting on a vast cash pile that fund your little ones, it is time to chalk out a comprehensive financial plan and invest systematically to secure your child’s future. You will find several investment options, but do not buy these products at random. Study and evaluate them carefully to understand which one will be the best option to give your child a better future.

Even before you start assessing the products, it is imperative to set your goals. Parents must have a clear idea about their child’s future needs and how much they should save for a smooth passage. Be it education or a grand wedding or any other priority, first lay down your goals in money terms keeping in mind specific timeframes (a graduation fund when your child is 18, a marriage fund at a later date and so on). And do not ignore inflation while you are at it. For instance, if a master’s degree in business administration from a reputed college currently costs Rs 20 lakh, add an annual inflation cost of around 10 per cent to the fund that you will need 15 years later, assuming your child is five years old. It means you will require a total of Rs 84 lakh.