Future planning for children

IIPM, GURGAON

Hi, I am Subhasish Dey! I’m working as an automotive industry manager in Huntsman International India. I am a father of one and my current annual income is Rs.12 lakhs. Financing my son’s education is my basic priority.

Subhasish Dey

“The times are changing and planning for children’s future is becoming important because one never knows when some unexpected expenditures creep up and for that one needs to plan for everything,” avers Subhasish. And judiciously so! His objective for investments is worry about his children’s future education. “For my son’s future, I consider Life Insurance Corporation (LIC) the best, as it was done by my father also. I invested in LIC’s Child Plan, which has a time horizon of 16 years and I have to invest Rs.4 lakhs in total and by the time my son will be 18 years old, he will be getting Rs.18 lakhs,” he says. He adds that he doesn’t trust private bankers for educational loans. “I don’t want to get bogged down by unnecessary hassles and paper work, rather would prefer investingOne recently aired ad of an insurance company had close frames of a father-son duo, where the latter is getting sporadic outburst of ambitious career options, that leaves the father gaping. Until Tendulkar comes to his rescue peddling a child benefit insurance plan. Well, we couldn’t manage Sachin but here we are with some of the best ways to secure your child’s future. And get this, experts say that currently available insurance plans “will also not serve the purpose!” Kartik Jhaveri adds that “parents will have to make some compromises if they only stick to insurance.” Woah!

So what next? Analysts opine that instead of insurance, one must go for equity options. “Without investing in equity, financing children’s education will be a mighty task,” cautions Jhaveri.

Remember, here we are assuming a conservative scenario that parents want to put their children into a reasonable business school after schooling. In such a scenario, a one time investment of about Rs.8-10 lakhs should be made with targeted returns worth 14-15%. And when we talk about such returns, you should know which road to hit – the equity road (stocks & mutual funds). Even mutual funds like diversified equity funds can serve the purpose.

So, if you are planning for a better future for your children (including a stint abroad, maybe), then some risks should be on the cards! regularly and encashing it when my children need it,” he explains.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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