As a parent, you would surely want to keep your child safe and secure, both today and tomorrow. However, simply wishing or saving now and then cannot make a difference. It is never a one night task, but rather takes in a lot of discipline, patience, and strategy. Indeed, one has the build a secure financial future, brick by brick.
Step 1: When talking about securing kids’ financial future, one should consider even the remaining money goals and priorities in life. Because, you just can’t dedicate all the savings towards child’s needs and neglect other money needs like buying a home, medical expenses, retirement planning, etc.
Moreover, if you have not planned well for other important money needs, you end up disturbing the savings you actually intended towards child’s education or marriage.
Step 2: Identify and prioritize each and every money goal. Also, evaluate the time in hand to meet each goal. For instance, if your child is a 5-year old and the goal is to save for her higher education, you have 15 long years of preparation. Similarly, every goal has a time-frame.
Step 3: Once you are all set with all your goals along with the respective time-frames, calculate the expected corpus required to achieve each goal conveniently, after beating inflation. For instance, the fee cost of an MBA seat may be 10% to 20% more, after 15 years from now.
The below table reflects the numbers from NSSO survey on education costs across the states in India. The table clearly indicates the huge spike in fee structures within a seven-year time frame.
Step 4: Now, save and invest separately for each goal, based on the available time frames. Wisely choose different investment vehicles to meet different goals and reap the desired benefits. The traditional investment vehicles like FDs, RDs, UlIPs do not offer many returns and fail to beat the inflation. Whereas, mutual fund investments, especially for long-term goals, in a well-diversified portfolio, yield better returns. The below table explains the comparison in returns.
Approach expert financial planners to get the calculations right, make the right financial moves and gain confidence. At ArthaYantra, we cater to the needs of every individual differently.After all, not every family is same, so are their needs! Get your personalized portfolio and create a perfect financial plan to secure not just your kids’ future, but the entire family!