Whatever stage of your life you’re in, money is likely to be within the top 5 of your priorities. Money is among the top most reasons couples fight and a major cause for stress among adults. And when you’re a parent and a little life depends upon you, the stress can be multiplied. March is always synonymous with financial planning and budgets, so I thought that this was the best time to share my budgeting experiences with you so that we can alleviate some of that money stress!
I had very limited knowledge about banking, saving and all money matters when my son was born, and when we decided to start saving for his future we were overwhelmed by the choices the financial market had to offer. Despite there being many options, none of the financial products targeted at planning for kids’ futures had a good track record. My head was spinning and the more I researched on the internet the more confused I got!
It was then that I decided that it was better to K.I.S.S. – Keep It Simple and Stress-free! And I’m sure you’d like to do the same, so here are some simple, stress-free ways to save for your baby’s future.
Stress-Free Ways to Save for your Baby’s Future
Decide how much to Save
The first step is to decide how much corpus a child’s wedding or education will cost in the future. While this may sound difficult, there are plenty of tools to help you, like this tool from HDFC. Tools like these can give you a decent idea on how much you need to invest every month.
For example, if the total amount required today is Rs 10,00,000 ( I entered my child’s age as 2 years) then at the end of 16 years I would require Rs 21,82,875 with an inflation rate of 5% (assumed). So, to grow a corpus of Rs 21,82,875 after 16 years, the monthly investment required is Rs 7,522.
How to invest every month to get assured returns?
I am not a great fan of all the endowment policies floating around, as though many of them boast of assured returns, they won’t be able to compete with inflation and market interest rates. The best way would be to invest in Debt and Equity equally.
Debt instruments are our traditional, ‘solid’ investments like:
- Recurring Deposits
- Sukanya Samiriddhi Scheme for Girls
Equity refers to shares and mutual funds. While direct equity in the form of shares is risky, you can always go for Mutual Funds, as they give good returns for long term investment. You can do this through SIPs (Systematic Investment Plan) every month for a period of 10-15 years. If you are market savvy then you can choose to invest in Mutual Funds yourself or else you can avail the advice of financial consultants who can manage the portfolio for you and check the fund performance periodically.
As Indian women, no investment plan is complete without gold! However, instead of investing in direct gold, you can always buy Gold ETFs which can be done as monthly investments too.
All this is general information to make things a little easier for your financial planning. I am not a financial expert so please pardon my ignorance if I’ve mentioned something wrong. Also, it’s best to hire a reliable financial planner to create the perfect financial portfolio for your needs. Happy Investing!
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