How should you plan for your children’s future?

Bringing a new life into the world entails many responsibilities and financial obligations. When it comes to protecting their children’s future, parents must plan ahead of time.
Only the ideal child plan would address all of these issues. It would also consider different stages of a child’s life, such as education, healthcare, and even marriage. There are a few things you should make sure that your child has a bright future.

Compounding is a powerful tool that you may use to your advantage

Higher education from a reputable educational institution costs a lot of money. Parents should keep this in mind and develop a robust corpus for their child’s education fund planning.
As a parent, you should consider the reality that the cost of obtaining an education in a decade will be higher.
Instead of depending on typical investment vehicles such as FDs, you should look at investment options that can help you multiply your earnings significantly. Your ultimate goal should be to create a child education fund large enough to satisfy your child’s financial needs even when you are not present.
Plan a better education for your child using a systematic investment method such as SIP and get used to perks such as compounding to develop an education corpus faster.
The table below provides a better understanding of the associated benefits of investing via SIP.

SIP Tenure	20 years	16 years	12 years	8 years
CAGR Yield(%)	14%	14%	14%	14%
SIP required	Rs. 8000	Rs. 14000	Rs. 27000	Rs. 57000

1. Make sure your child is safe

Ideally, you begin thinking about investing for your child’s needs when you decide to have a child. The goal is to create a financial plan that will serve as a stepping stone for your children’s requirements. Because your child is dependent on you, it is your job to care for him even when you are not present. Begin with a policy of insurance. Choose a term plan with a guaranteed payout of at least 20 times your annual salary. It will serve as insurance in the event of an unforeseen event.
A standard insurance plan will not function because the returns on the endowment and money back plan range between 4% and 6% and do not outperform inflation. Examine the medical insurance coverage once you’ve purchased life insurance. Consider purchasing a family health insurance policy that includes your youngster.

2. Consider all expenses

A child will incur both short- and long-term costs. Recognize that you will require funds to care for your child for the next 20-25 years. Invest in mutual funds for long-term goals such as higher education and marriage. For a long-term aim of more than ten years, seek an asset allocation that includes at least 70-80 percent equities, depending on your risk tolerance. Aside from stock, consider investing in risk-free lock-in products. Consider a public provident fund and bonds, for example. While you plan for the long term, you will also be paying for immediate demands such as school tuition, healthcare expense, or other activities.
Consider investing in debt funds and fixed deposits for short-term needs. You can use these funds to pay for your child’s annual educational expenses.

3. Don’t ignore your objectives

Your child’s financial requirements are just one of your numerous financial objectives. Don’t overlook your financial requirements. Many parents, for example, fail to plan for their retirement and spend all of their savings on their children. Don’t use your retirement funds to help your child if you run out of money. While working on your child’s plans, make sure you always have enough money for your future demands.

Finally, if you’re still undecided, use the button below to schedule a free 20-minute consultation.