Why Financial Planning for Children is a Must for Your Child’s Future Success

You want to be the wind beneath your child’s wings and to watch proudly as he or she soars high.

When it comes to financial planning for children, there’s no opportunity that should be missed.

For example, suppose you’re thinking ahead and want to spare no expense when the time comes for your child’s wedding. Now, if your child is one year old, and you find out that currently a great wedding extravaganza costs INR 25 lakhs, what will you have to spend when your child is 21?

The answer: over INR 80 lakhs. That is, if you take a very conservative rate of inflation of 6% per annum, for 20 years.

This is why many people feel that the financial planning for children should start before the child is even born. But whatever age your child may be, if you don’t have a child investment plan in mind, you should start now.

Typically, such a plan should keep in mind day-to-day expenses, growing needs, education fees, and marriage expenses.

Financial Planning for Child Future with Insurance and Fixed Deposits

The financial planning for children starts by keeping unforeseen and unfortunate events in mind. A term life insurance policy with a cover that is several times your monthly income can act as security. The returns on other types of life insurance plans are typically much less than what you can get with other forms of investments.

Then, look at medical insurance. There are various family plans, and you can choose one that provides adequate cover for your family members as well as your child.

If the tax liability can be handled by you, you can also look at other reliable options such as bank fixed deposits. The interest earned here can suffice for yearly school and other fees while your child is growing up.

You can also consider PPF for long-term goals, keeping in mind that there is a cap on the amount that can be invested annually, and there is a lock-in period of 15 years.

The Key Role of Mutual Funds

Mutual funds as an asset class are known to be professionally managed and to deliver regular returns over time.

Depending on your risk appetite and time frame, there are various types of mutual funds you could look at. There are equity funds that can deliver higher returns with more risk, and there are debt funds that are relatively risk-free. There are also combinations of the two.

For long-term needs such as higher education and marriage, you could look at equity funds. Here, the number of years invested means that market volatility need not worry you in the short run.

Another advantage of mutual funds is their flexibility. Your dreams for your child will evolve over time, and with this flexibility, you can plan on investing accordingly. For example, you could start with a low monthly SIP, and increase this amount as the years go by for a meaningful financial planning for child future.

At Sykes & Ray Equities, We Start with Your Needs

One of the unique features of the way we work at Sykes & Ray Equities is that we put the client first.

We won’t just start out with recommending investments. Instead, we’ll work out a thorough plan for child investment only after listening to you and assessing your needs.

As one of the pioneers in investment planning, with 30 years of rich experience, we firmly believe that investments need to be planned wisely and well.

Our investments are recommended by a team of certified financial planners who act on the recommendation of our research desk.

It's this approach of always keeping the client's needs in mind that has made us a respected name in the business.

Do contact us to find out the best investment plan to make your child reach for the stars.