What To Save For Kids
A smiling kid brings happiness to their parents and in fact everyone in the family. But don’t you want that smile to continue when he/she keeps on growing. Here’s where saving for your kids future becomes important. In order to make this happen one of the first step is make a savings plan for your child and
accordingly create investment plan.
So here’s the list of savings plan: Ideally your plan should include saving for school education, college education, higher education in foreign countries, marriage, routine expenses (birthdays, picnics, clothings, entertainment etc..). Let’s go in detail:
- School Education: Rising inflation rates and expensive schooling has burdened family budget in India. Cost of kids education has risen by almost 65% in India in the last 5 years. So parents which were earlier spending INR 30,000/year before 2008 have now to spend INR 48,000 to INR 50,000 in 2012. So what has added to this increase? The answer is inflation which has caused parents to spend more on expenses like tuition fees, text books, stationary, school bags & clothes, sports, private coaching classes etc..
- College Education: As your child grows, so does the expenses. The cost of graduation (BE, BSc, BBA etc) are expected to be rise by 200% in the next 10 years. So if the current rate continues, a bachelor’s degree which now costs INR 5-6 lakhs would cost over 18 lakhs after 2020. And same would be the scenario for post-graduation education in India or foreign country..
- Marriage: Rising inflation has forced us to think about marriage cost of your child 20 years from now. An average middle class family in India will have to spend nearly 40% more on marriages which involve – reception, clothings, jewelries, honeymoon etc. Of course, in India, marriages differ depending on whether marriage is taken care of by boy/girl’s parents, type of wedding, caste, number of guests, location, timing, number of days etc..
- Other Expenses (Clothings, Entertainment, Picnics, Birthdays): High inflation rates affects every business which directly burns the pocket of the end user. Adding to the woes is the monsoon. Poor the monsoon, higher goes the price of end product.
So where should you invest to meet above requirements? There are ample of options which guarantees you a good return on investment but before you choose your options, you can ask your investment planner or invest in:
- Mutual funds especially for children: Amongst the top recommended options are HDFC Top 200 Fund, Reliance Vision Fund, Fidelity India Children’s Education Fund, Children’s Marriage Fund, ICICI Prudential Child Care-Study Plan
- Stock Market: Look for blue chip companies which have been performing consistently better in the past.
- Commodities (Gold & Silver): Despite sky rocketing prices, Indian consumers are willing to invest in gold as excellent returns guaranteed in the future.