Planning for our children involves a higher level of emotional quotient than any of our other financial goals. Most of the time, we do think about questions like ‘where would my child study?’ ‘What would they become?’ ‘Will I be able to support my child’s ambitions financially?’ And more such things whenever we sit down to discuss the future.
The pressure of rising inflation and growing competition makes us think twice about all our answers and options. Therefore, it has become increasingly important to know whether your investments will beat inflation.
Here are four investment hacks that can help you secure your child’s future:
1. Starting an SIP
Mutual Funds can offer you many options when it comes to investing bit-by-bit for your goals. Your child goals are no different. You can choose to invest using the SIP (Systematic Investment Plan) route or the Lumpsum investment route in a mutual fund.
You can start with an SIP with a minimum amount of ₹500 and gradually increase your SIP as your income and savings improves. You can even make a lumpsum investment if you have managed to save more, in addition to your SIP. Thus, you can systematically channelise your saving towards securing your child’s future with mutual funds.
2. Diversifying with Assets
Whether you invest in equity or debt, you are always exposed to some risks. In equity funds, you can face market risk, whereas, in debt funds, you can face liquidity risk, interest rate risk and more. It would be risky to expose your child’s future to any of these risks. This is where mutual funds come to your rescue. It offers your desired diversification based on your goals and their timelines. Having a combo of assets in your basket can guard your portfolio against uncertainties and risks.
3. Starting Early
One of the most crucial decisions that can considerably influence your child’s future goals is starting early. Making the first step towards your child goals can activate the power of compounding. With compounding, you can reach your goal early and accumulate more funds for them.
4. Seeking Advice
There are numerous child funds available in the market. However, it is essential to choose the right fund that matches your risk appetite. It is also vital to seek financial advice to know the right investment strategy and suitable funds for your child goals. This can help you clearly define your child goals with the inflation-adjusted amount, timelines, risk appetite and more.
To conclude, mutual funds can play a critical role in helping you secure your child’s future, provided it is done correctly. Seeking financial advice from a professional, starting early, diversifying your portfolio, and investing bit-by-bit can help you get your child’s investments right.
Article Shared by Tata AMC