A Rs 5,000 monthly Systematic Investment Plan (SIP) started at birth can build a significant corpus by the time a child turns 18. The numbers show how early investing can reduce the pressure of rising education and lifestyle costs.
Raising a child in India can cost between Rs 55 lakh and Rs 85 lakh, depending on lifestyle, education and inflation. This makes early financial planning essential for parents aiming to manage future expenses without stress.
A disciplined SIP approach allows parents to invest a fixed amount every month while benefiting from compounding. Returns generated over time add to the investment, helping the corpus grow faster across a longer horizon.
Corpus Check
If a parent invests Rs 5,000 every month for 18 years at an assumed annual return of 12%, the total investment stands at Rs 10.8 lakh. Estimated returns come to Rs 27.09 lakh, taking the final corpus to about Rs 37.89 lakh.
This shows how a relatively small monthly contribution can grow into a sizeable amount when given enough time. Starting early increases the duration of compounding, which plays a central role in wealth creation.
ALSO READ: Starting At 27? Here's The SIP Plan You Need To Build Rs 1-Crore Corpus
Investors can choose across equity funds for growth, debt funds for stability or hybrid funds for a mix of both, based on risk appetite and time horizon.
Returns Gap
Many parents still rely on fixed deposits or savings accounts for long-term goals. These instruments typically offer returns of around 6-7%, which may fall below inflation after taxes.
Lower returns reduce the real value of savings over time. This means parents may need to invest more later to meet the same financial goals.
ALSO READ: Planning PPF For Your Child? Investment Limits, Guardian Rules And Tax Treatment Explained
Delaying investments also shortens the compounding period, limiting the ability of investments to grow over time.
Step-Up Plan
Parents can increase SIP contributions as income rises, which can further improve the final corpus. Higher contributions in later years can accelerate growth without changing the overall strategy.
Starting early, staying consistent and reviewing investments periodically remain key to building a corpus that can support a child's future needs.
ALSO READ: Start With Rs 10,000 A Month: Can You Still Build Rs 5 Crore By Retirement?
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.