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Women's Weekly: Investing for your child - Views on News from Equitymaster
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  • Sep 24, 2009

    Women's Weekly: Investing for your child

    Raising kids is not an easy task for any parent. As George W. Bush said "I've been to war. I've raised twins. If I had a choice, I'd rather go to war." Whether you are the President of a country or a common man, one of the most tugging worries for every parent is always their child's safety and security, both physically as well as financially.

    Our children are the future, so what are we doing to ensure the stability of their future as well?

    Women's Weekly discusses how the key to preparing for your child's future needs - be it education, marriage, capital for business ventures - lies within the realm of investing, so that once they come of age and the money is required you are ready and prepared to stand by your child's side and help him or her.

    First priority: Child's future

    When kids are really small, they play with whatever is available from daddy's key chains and mom's purse to granddad's spectacles. Everything for them is a toy. When they grow up, key chains get replaced by Barbies, mom's purse by branded satchels and granddad's spectacles by videogames. As they grow up, so do their demands, their needs and most importantly their dreams.

    The kid who wanted to be a bus driver because he was enamoured by the red colour of the BEST, today wants to be automobile engineer making only custom made cars, the child who wanted to set up a doll house for her doll now wants to be an interior designer, armed with a degree from abroad.

    And, as parents, we want them to achieve their dreams. We want them to have the best of all the worlds - best schools, best colleges, and the best education possible. Children dream of flying and we want them to soar as high as possible, reaching for places we only heard of. And how do we make all this possible?

    Set goals

    The best initiative would be to set up goals. Parents nowadays believe that a good education is as profitable for their children's growth as a sound investment is for an investor's portfolio.

    Decide on the various events of your child's life that you want to be prepared for - school, college, marriage and then work out an investment plan which would support these events.

    So a parent will not only secure a few beneficial blue chip stocks, but also invest in their child's future by investing soundly right from the beginning.

    Building blocks

    Children love to play with building blocks and building tall towers. They carefully place one block on the next, making the former the strong foundation for the latter. As they grow up, the plain building of blocks gets replaced by various milestones- each milestone becoming the foundation for the next.

    The best way the parents can ensure a strong foundation for their children is by establishing investments. The various investment options prevalent today are -

    1. Mutual funds - some fund houses offer dedicated child plans which are targeted over long term investment and growth maturation. SIPs are a good way to start investing as they are a smaller monthly amount which allows you to save and invest at regular fixed intervals as opposed to a one time lump sum investment.
    2. Savings schemes such as PPF/NSC/KVP offer assured returns over a fixed tenure to benefit your child.
    3. There is also the dedicated investment option - the ULIP (United Linked Insurance Plan) which offers you life insurance along with an investment like a mutual fund. A part of the premium you pay will be set aside as the insurance cover sum assured, while the rest will be invested in investment plans such as equities, fixed return schemes etc.

    Be a parent and an investment advisor

    As a parent you should teach your child about the benefits of investing for long term growth. No we're not saying to teach them strategies of equity management as they learn their ABC's! As you save money for your own retirement perhaps, you can save money alongside for your child's growth and explain the necessity of such an account.

    Once you introduce your child to the concept of savings and how savings can be invested wisely to further show greater returns, your child too will start savings and investing! Did you know that ducklings are known to follow whatever or whomever they have a first impression of and this is known as the baby duck theory? This theory can also be applied to your little ones! Teach them from when they are young about the benefits of investing and saving and soon you will see them following in your footsteps and saving regularly.

    Just as you read the story of 'Jack and the Beanstalk' to your little child and see her eyes light up when Jack emerges triumphantly away from the evil giant, similarly your child will see how the seeds of investment that you are sowing for her future will endow her with financial security as she grows, will make both of you happy and proud.

    The best way to secure your child's future is not only by making the right investments but also by teaching them how to go about handling money.

    As Warren Buffet, the famous investor says, "The perfect amount of money to leave children is enough money so that they would feel they could do anything, but not so much that they could do nothing."



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    2 Responses to "Women's Weekly: Investing for your child"


    Sep 30, 2009

    The roots of the tree are bitter but the fruits are sweet



    Sep 26, 2009

    your women weekly is good idea throurgh which you can give better tips to buy gold unit,specailly for girl child. god bless your company.

    Equitymaster requests your view! Post a comment on "Women's Weekly: Investing for your child". Click here!

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