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Begin planning for child education and marriage soon after birth

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The birth of a child is always a very special and joyful moment in any family. Every parent wants to give the best of everything to the child, be it a great childhood, education, wedding or any other thing. So whenever a child is born, parents usually try to invest some money in the child's name in an LIC policy, fixed deposit or buys gold for his/her illustrious future. Many a times, they just invest some lump-sum amount, thinking it would help meet the child's future goal and then conveniently forget about it. Assuming a rate of interest of 8% in FD, Rs 10,000 invested, after 20 years will be Rs 46,600, which may turn out to be almost nothing when your child goes for higher education. Also, there are people who would initially do an FD for 10 years, and then forget to renew it.


Of late, a new trend is observed among the educated lot, that of buying a child insurance policy thinking this as a magic wand to help them plan their children's career. Some of the life insurance companies position this product very smartly by pitching the ads during prime time slots so that when the parents are watching, it becomes an easy sales pitch. This may not be true.


When my daughter Aditi was born, I followed a different approach. When she came into our life, there was a feeling of happiness and completeness in the family. I also knew I had an added a responsibility now. So the very first thing I did was to increase my term insurance by Rs 1 crore. Now, I was at peace of mind that even if something were to happen to me, my family will get an additional Rs 1 crore which can be effectively used for my daughter's future and she can enjoy the same benefits which I wish to provide her even if I am not around.


Additionally, I started saving for Aditi's education and marriage so that I can easily give her a happy and financially secure future. I started investing Rs 10,000 every month through SIP in a diversified equity-oriented mutual fund. In her naming ceremony, she received Rs 1.2 lakh in cash as gifts from our relatives. Because I thought this money was hers, I thought I should not touch this money for my requirement and instead invested the same into an existing fund. From then on, whenever there is any other occasion like birthdays, marriages in the family, or some other festivals, she again receives cash gifts ranging from Rs 5,000 to Rs 20,000, which we simply reinvest in to the same fund.


Normally people buy gold on Akshay Tritya but I went and added Rs 20,000 in the same thing as I definitely believe equity is the best asset class which can deliver inflation beating returns. I am happier when the market falls, as I get more units for the next SIP instalment. As Warren Buffet says, if you are going to be net saver in the market for next 10 years, do you expect the market to go up or fall down and I think we all know the answer.
My aim is to continue this investment for the next 25 years. The most important factor is the discipline. If I continue the same, she would receive around Rs 50 lakh when she is 18 for her graduation and approx Rs 1.32 crore for her post-graduation on her 23rd birthday assuming a compounded annual return of 15%.


As every Indian parent dreams of organising a big fat wedding for the daughter, so do I. I started another investment of Rs 10,000 for her marriage wherein she would receive approx Rs 7 crore for her marriage when she turns 30. And at that time I will not have to dip into my retirement savings for her wedding, which unfortunately most parents have to resort to because they don't plan in advance.

Happy Investing!!

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