1. Young parents must start saving immediately after the birth of their child, because an early beginning gives more time for your investments to grow and provide a bigger corpus for securing its financial future.
2. Define your goals and their time frames for choosing appropriate investment products for each of them.
3. Don’t depend on low-yield products alone, as you might fall short of targets set for fulfilling your child's dreams.
4. Select the investment products on 4 basic factors:-
a) Tenure of the investment,
b) Risk you are willing to take,
c) Returns offered by the option, and
d) Taxability of its income.
5. Invest money that is not going to be touched for a long period of 15-25 years in equity-based investments for highest long-term returns.
6. For short-term goals, put the money in a debt fund, or even in a fixed deposit, depending on your risk profile.
7. As your child’s income is considered your own for taxation, go for tax-efficient options like PPF, 5-yr FDs, ELSS funds, etc. in its name, which will help you defer tax for years, even decades.
8. Collate the child's portfolio into a mix of short-, medium- and long-term products, with each of them achieving a defined goal, by understanding that:-
a) Fixed deposits offer safety and assured returns, but won’t be able to beat inflation;
b) Equity funds offer high growth, but carry a risk and don’t offer any insurance cover;
c) Child insurance plans offer an insurance cover and grow the wealth, but levy high charges;
d) Gold helps to fight inflation, but does not offer diversification.
9. Buy adequate health covers and online term plans, being essential low-cost tools which protect your child's and family's wellbeing and unfulfilled goals and targets in case of your untimely demise respectively.
10. Lastly, you should always have a strategic contingency plan to take care of family needs during job loss or EMI increases or whatever may put stress on your expenses and savings.
2. Define your goals and their time frames for choosing appropriate investment products for each of them.
3. Don’t depend on low-yield products alone, as you might fall short of targets set for fulfilling your child's dreams.
4. Select the investment products on 4 basic factors:-
a) Tenure of the investment,
b) Risk you are willing to take,
c) Returns offered by the option, and
d) Taxability of its income.
5. Invest money that is not going to be touched for a long period of 15-25 years in equity-based investments for highest long-term returns.
6. For short-term goals, put the money in a debt fund, or even in a fixed deposit, depending on your risk profile.
7. As your child’s income is considered your own for taxation, go for tax-efficient options like PPF, 5-yr FDs, ELSS funds, etc. in its name, which will help you defer tax for years, even decades.
8. Collate the child's portfolio into a mix of short-, medium- and long-term products, with each of them achieving a defined goal, by understanding that:-
a) Fixed deposits offer safety and assured returns, but won’t be able to beat inflation;
b) Equity funds offer high growth, but carry a risk and don’t offer any insurance cover;
c) Child insurance plans offer an insurance cover and grow the wealth, but levy high charges;
d) Gold helps to fight inflation, but does not offer diversification.
9. Buy adequate health covers and online term plans, being essential low-cost tools which protect your child's and family's wellbeing and unfulfilled goals and targets in case of your untimely demise respectively.
10. Lastly, you should always have a strategic contingency plan to take care of family needs during job loss or EMI increases or whatever may put stress on your expenses and savings.