Parenthood comes with many responsibilities, including ensuring the child's financial security. From insurance to investments, preparing in advance is key to getting timely yields. As the child grows, expenses often rise sharply, with higher education and extra-curricular activities adding new financial demands. However, you can make this journey less stressful through long-term planning.
Building a corpus of Rs 1 crore can provide a strong financial foundation and protect parents from unnecessary stress. An investment plan over a horizon of at least 15 years can help you easily accumulate Rs 1 crore even with small contributions.
By harnessing the power of compounding and spreading investments across assets, parents can support their child's needs with confidence.
Here is a proposed roadmap to reach the Rs 1-crore milestone in 15 years:
Systematic Investment Plans (SIP)
Historically, trends reveal that investing in mutual funds helps generate higher returns. With modest contributions too, parents can let the power of compounding work for them.
Monthly investment needed: Rs 6,000
Annual step up: 10%
Time period: 15 years
Expected returns: 12%
Invested amount: Rs 22,87,618
Estimated returns: Rs 29,22,690
Total value: Rs 52,10,309
Gold
Monthly investment: Rs 5,500
Expected return: 10%
Time: 15 years
Invested amount: Rs 9,90,000
Estimated returns: Rs 13,08,583
Total value: Rs 22,98,583
Public Provident Fund
Monthly investment: Rs 7,500
Time: 15 years
Return: 7.1%
Invested Amount: Rs 13,50,000
Interest Earned: Rs 10,90,926
Maturity Value: Rs 24,40,926
Parents should note that these are estimated returns. A mix of high-return investment instruments along with secure schemes could be suitable for reaching the Rs 1 crore target. Schemes like PPF can also be explored for long-term wealth accumulation with tax benefits.
However, parents may decide to switch the allocation amount between various assets based on their risk appetite and financial position. It is also advisable to seek the guidance of a financial expert to avoid any uncertainties in future.
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