India is gearing up to celebrate Children’s Day on November 14 and the best way for parents to celebrate the day would be to plan for their future so that their children can realize their dreams.
Rising inflation makes future financial requirements for a child such as education, extra-curricular career goals and marriage more expensive. Hence, it becomes important that parents plan for their children’s future needs early on and give sufficient time for these investments to grow.
A research by Aditya Birla Sun Life AMC shows that school fees, tuition fees and other associated expenses has risen by 150% in the last 10 years. Average annual expenditure on private schooling has risen by 175% in the same period, while the cost of professional and technical education has gone up by 96%.
How to plan it?
Various surveys show that even as parents plan for their children’s future, they miscalculate the cost of future financial requirement and do not choose the right investment option. Many parents opt for traditional avenues with fixed return instruments, which offer suboptimal post-tax returns.
Considering the nature of returns and time-horizon required to plan for a child’s future, equity mutual funds can be a good option. Among equity funds, there are certain solution-oriented equity funds that are specifically designed for children’s future.