Children are just another name of the bunch of happiness that comes to one person and changes his entire life. From the very first day of your baby in your arm to till he becomes self-dependent, it is the sole responsibility of the parents to nurture her, educate her and give her a gift of better future.
A better future for one's child is a dream of every parent. But chasing that dream needs lots of pre-planning and perseverance. All your plans regarding your children or your child's dream for his future takes a halt when it comes to the finance. A proper financial planning must be done at an early age of your child so that the dream of your child can come into reality without any financial hiccups. Why A Financial Planning Is Needed For Your Child's Better Future? As long as your child is undergoing primary education, you may not feel the financial pressure. The time when you are with a less pressure is the best time to make yourself prepared for the days when you will need to invest a lot in your child's education. As the inflation of money makes its highest effect on the education sector, it is almost unbelievable that the higher education is going to cost a sky-high amount. For example, the 2018 batch of IIM Ahmedabad has to pay a course fee of INR 19.5 lakhs for a two years course which is 400% higher than the course fee of 2007. This shocking fact may make the parents stand speechless thinking about the corpus which they will need for higher education of their child. Let's say your child is now 3 years old. He will go to college after 15 years. At present day the college expense of one student is around INR 5 lakhs. If we take inflation at 10%p.a., it will cost around INR 20.88 lakhs after 15 years when he will go to college. How Should You Plan? After 15 years when this big day of admitting your child to college will come, you must not struggle to arrange this fund. If one starts saving early then he can easily bear the expense. Assuming a return of 12% pm, one has to invest Rs.4180 per month so that he can have a return of Rs.20 lakhs. This is just an example of a general graduation. If one goes for professional courses, It would cost much more. According to the course fee and the age of the child, one has to calculate the investment. An investment is always sooner is better. The ideal investment for your child's higher expense should start when your child has stepped the school premises for the first time. When you start investing at an early age, you can attain your financial goal at a comparatively lower investment and of course lower physiological pressure. The best way to start investing is with a mix of different kind of investments. One must not invest in only one platform. Some of the secured government securities such as National Savings Certificate, NSC, and Public Provident Fund, PPF are a must have as though they give a low return but they are certain. While one should have some investments in mutual funds and primary equity markets too for a higher return. The secured investments will reduce the risk while the rest comes with a probability of higher returns. While investing in mutual funds, the best returns can be expected when the investment gets a hike along with the growing income. If a person makes a hike of a minimum of 20% in his SIPs every year, he will be able to earn a return of almost double which he will get with a uniform SIP whole through the tenure. Points To Ponder Before Investing
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