Importance of Investing in Your Child's Future

Having a child is the greatest source of happiness. However, it also comes with a lot of financial and emotional responsibility. Every parent wants to give their child the best of everything, whether it's education, higher education, or meeting other requirements. However, the responsibility to improve your child's future is more significant than that.

As a parent, you will always look for the best quality education, no matter how expensive it becomes. Not only that, but your child's life may be immersed in special events such as marriage, starting a business, and so on. So it would be beneficial if you were also prepared for that. For this, having an effective plan is a must.

In India, the fee today for the Entire Graduation can cost Rs 8-15 lakh. After adding a 12% annual hike in education costs, the average expenditure would come around Rs 14 lakh and Upwards. And in case you're thinking of a foreign college education, the total cost of education can be more than $70,000 at Ivy League Colleges in the USA.

(Source: Livemint)

Have you ever thought about how you will plan your child's future? How will you manage future expenses with the increasing rate of Inflation? So many calls need to be taken now before it's too late. Growing Inflation may hinder you from efficiently providing the best things to your child. To better prepare for the future, let us take an approximate of how much money you may require in your future to fulfil the requirements of your child at various stages:

Let us Check Where do You Stand

Assuming your child's current Age = 5 years,

And, Age when your child enters graduation = 18 years,

This means, Number of years left to plan for this financial goal = 13 years.

(Similar calculation will be repeated at every stage of education to calculate the approximate monetary value)

Below is the table, for the amount required for the child’s education at different stages adjusted with inflation (As education costs are increasing by 10%)

Source - ET Money (link)

Understanding the above table, you can also prepare your own financial chart.

Are You Prepared?

As per your personal table, if you are financially prepared for all the above goals for your child's future, you're a prepared parent. But if you're not, you don't need to worry because we know where to begin.

Assuming you need around Rs 50 Lakhs by the time your child turns 21, we would calculate the Investment returns on a rate of return of 11%

(The above explanation is for illustrative purposes only. There is no assurance of any such desired target being achieved due to the impact of Inflation and other related factors. Actual results may vary. Consulting a financial expert is advisable before investing. RoR is taken as 11% p.a. Compounded monthly.)

To meet these expenses, around 89% of parents in India are ready to make personal sacrifices for their children. Around half of the parents have already reduced spending on leisure activities. Almost a third of them work overtime in their existing jobs to save more for their kids.

What's your Best Weapon to Beat Inflation?

Children's education is typically a long-term goal; therefore, you should invest through instruments that provide inflation-beating returns. The Systematic Investment Plan (SIP) in mutual funds has proven to be effective in making financial goals a reality. So, through SIP, you can achieve the best possible success for all financial plans. You can save and invest according to your future financial needs.

It would be best if you aimed to increase your SIP investments every year as your income and salary increase. This can be a fixed 10% increase every year or based on the salary increase percentage each year.

Starting your investments and savings early gives you the benefit of compounding, which can prove advantageous in the long run. The Sooner, The Better!

For a promising Future, proper education is necessary. By investing in an SIP, we can help our future generation build a strong foundation for their own future.

Plan your child's future in your heyday. Invest in SIP today!

Disclaimer - Mutual Fund investments are subject to market risks, read all scheme related documents carefully