Child Investment Planning

Children and their well-being often rank as the highest "priorities" for parents and words like "only the best for my child" are rather common. However just having your heart in the right place isn't sufficient. Instead what you need is a practical approach to ensure that you work towards providing your child with a financially secure future. And that just might be the best present you will ever gift your child

For children of different age group the path to child planning can be varied:

Age of the child: Newborn to 6 yrs

Investment horizon: 12yrs to 18 yrs

If you start investing at this stage, you allow your savings the maximum time to build up assets for your child’s education. With time on your side, you can take higher risk and go for equity funds. However, if you choose to invest on a regular basis, try and increase the amount every year.

Age of the child: 7-14 yrs

Investment horizon: 6yrs to 13 yrs

While a part of the portfolio may still focus on aggressive investment options like equity funds, you will do well to include balanced funds also to reduce risk. The attempt should be move money to lesser volatile investment options, as the child grows older.

Age of the child: 14- 18 yrs

Investment horizon: 2yrs to 5 yrs

At this point of time, it would be advisable to invest in funds that are least volatile and overall the focus should be on preserving capital. The liquidity should be an important point whiling working out the strategy. While the open-ended mutual funds will ensure that the money is available to you as and when you require it, the key is to make the money grow at a reasonable rate.


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