The best gift you can give your child this Children’s Day
While we all wish to gift our children the life that they would want, a life they would have dreamt of, what we need to plan is how we are going to achieve this goal.
Children’s Day is celebrated across India today. While we all wish to gift our children the life that they would want, a life they would have dreamt of, what we need to plan is how we are going to achieve this goal. Their dreams might change from time to time, might get bigger and better, but your financial plan has to have the potential to take care of all their needs.
Your paycheque need not decide your financial goal for your child. Realizing the utmost potential of your pay cheque could help you to achieve all your financial goals. In other words, anyone who can plan prudently and allocate their investments in the right asset class can achieve their financial goals – both big and small.
For long term financial goals for children, you could opt for equity mutual funds - power of equities through mutual fund investments.
For any long term goal, the simple formula is to make the most of your time and money. Starting early will help you to start small. A step at a time and you are set to achieve your bigger goals. An SIP in equity mutual funds will help you to start small. All you need to do is to let your money make use of the power of compounding over the long run.
Also, make sure you have enough and a different set of funds assigned for contingencies or other requirements. SIPs are not meant to be touched, unless and until they reach their financial goal. Making use of an SIP during an emergency will not only be an obstacle to reach your financial goal, but also restrict the power of compounding to do its magic.
Once you have allocated your funds for all your different financial goals, managing your money becomes easier. All you have to do is to keep a close eye on your investments. When the right time comes closer, you could start de-risking your portfolio. That is, when you know you would need that money to pay for your child’s college fees or apply to some B schools abroad in the near term, you should ideally start shifting your investment in equity mutual funds to debt mutual funds, so that your gains are moved to a safer avenue.
A prudent asset management will help you to give your children the life you have dreamt for them, or they have dreamt of for themselves. Instead of spending your money on expensive toys or smart phones that don’t really add to your kid’s smartness, gift them financial security that they deserve. No matter what they decide to do with their life, your planning will give them wings to explore the life to the fullest. This Children’s day is your reminder to plan for a life that you have always wanted for your child.
(Harshad Chetanwala is the head of customer delight at Quantum Mutual Fund)