The best gift you can give your child this Children’s Day Thursday, Nov 14, 2019
Children’s Day is celebrated across India for the heart melting innocence that restores our faith in humanity. 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 pay cheque need not decide your financial goal for your child, but realizing the utmost potential of your pay cheque could help you achieve all/ any of 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 any long term goal the simple formula is to make the most of your time and money. Starting early will help you start small. A step at a time and you are set to achieve bigger goals. An SIP in equity mutual funds will help you start small. All you need to do is let your money make use of 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 power of compounding to do its magic.
Once you have allocated your funds for all your different financial goals its makes managing your money easy. All you have to do is keep a close eye on your investments. When the right time comes closer you could start de-risking your portfolio. Which means, when you know you would need that money to pay your child’s college fees or apply to some B school abroad in the near term, you should ideally start shifting from equity to debt, so that your gains move to a safer area.
A prudent asset management will help you gift your child the life you have dreamt for him/her, or they have dreamt for themselves. Therefore 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 deserves. No matter what they decide to do with their life, your planning will give them wings to explore to the fullest. This Children’s day is your reminder to plan for a life that you would want to gift your child.
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