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Aditya Birla Sun Life AMC Limited

Aditya Birla Sun Life AMC Limited

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    Aditya Birla Sun Life AMC Limited

    5 Must Have Investments For Your Child's Future Plan Portfolio

    Aug 01, 2019
    5 mins
    5 Rating

    Saving for your child’s education is directly proportional to your regular contribution to your entire financial plan

    • Biggest Cash Outflow is saving for higher/professional degree education

    • 2-year Post Graduate Programme in Management

    2018 - MBA course – Rs 22 lakhs approx
    2027 – MBA course – Rs 40 lakhs approx
    2036 – MBA course – Rs 75 lakhs approx
    (Assuming cost of education rising by 7% every year)

    Source: https://www.iima.ac.in/web/pgp/apply/domestic/expenses

    Lifestyle & Inflation

    Standard of living & Inflation = Choice of where to send child for higher education, Child’s marriage in future etc

    How to break through?

    1. Be the Early-Bird

    Don’t underestimate the Power of Compounding - Illustration

    • Current Child Age – 1 year

    • Target corpus –Rs 75 lakhs

    • Monthly Investment Target

    2. Aim to invest in Right Options

    a. Equity funds can be considered for long term

    • Risk – moderate to very high
    • Category Average returns – 12 to 15%
    b. For short term needs such as school fees, uniform expenses, medical etc Debt or money market instruments can be considered
    • Risk – low or moderate
    • Category Average return range – 6 to 8%

    3. You can consider Children’s Funds

    • These invest in a combination of Debt and Equity instruments.

    • Comes with a lock in period to encourage long term investing for child

    • Provides an option to start Systematic Investment Plan (SIP)

    4. You can invest in Gold for long term

    • Gold can be considered as an investment option

    • Invest through ETFs, Gold Fund or E-Gold

    • Gold can hedge during volatile times

    • You can allocate 10 – 15% of your overall portfolio towards gold

    5. Investments and Insurance

    • Prudent to keep them separate

    • Insurance may cater to expenses after one’s demise

    • Aim to take appropriate cover as per your profile

    • Separate investment in Equities/Debt can help build corpus and wealth over long term

    6. Skills and Values

    • Invest in child’s skill set – Art, Sports, Technology etc

    • Teach values – Honesty, Determination, Consideration etc

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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