Having a child entails a lot of responsibilities which may need a lot of financial support. There are two major expenses which every parent must foresee: Higher Education & Wedding.

Instead of saving money in an account, creating FDs or buying insurance policies, we advise you to invest a small amount every month. This would accumulate a large corpus in the next 15 to 20 years.

Let’s say you earn around Rs 50,000 per month when your child is born. If you invest just 5% of your income (Rs 2500) every month in SIPs, increasing it by 5% every year, with an annual return of 16%, your invested money would grow to about:

  • Rs 51 Lakhs in 18 years, or
  • Rs 1.75 crores in 25 years

So instead of making insurance policies in your children’s name, invest using SIPs. This is because insurance plans usually give returns in the range of ~6% per annum which may grow to a significant amount in absolute terms but does not do so in real terms.

Insurance companies also invest in the equity markets – the difference is that they keep a large chunk of the profits with themselves, all in the name of safety and security.

Save smarter. Start an SIP.

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