SIP Calculator: It is not necessary that you always start investing with a large amount. You can start investing for your child with a very small amount and increase the investment little by little over time.
SIP Calculator: With the birth of children, the responsibilities of parents increase. On the other hand, if you are the father of a daughter, then as soon as she is born, all the things from education to marriage start going around in your mind. Instead of carrying the burden of responsibilities, it is better to start financial planning for the child with her birth, so that future goals can be achieved easily. It is not necessary that you always start investing with a large amount. You can start investing for your child with a very small amount and increase the investment little by little over time. In this way, you can deposit a large amount for the child till she turns 18. Here’s how to do it-
Start SIP at birth
If you want to save a big amount for your child, then start SIP at birth. Because of being market linked, you will have some risk in SIP, but long term SIP can give you returns which are not possible with any other scheme. Experts believe that the average long term return of Mutual Funds SIP is 12%. Sometimes it can be more than this.
Start with just Rs 1000
If you start SIP for your child with even Rs 1000 at the time of her birth, then you can save more than Rs 14 lakh for her by the age of 18. For this, you just have to top up SIP by 10% every year. Top-Up SIP is a facility in which you can add some amount to your regular SIP. You have to increase the current investment amount by 10% every year, which is not a very big amount.
This is how you will get ₹14,41,466
Suppose you started a SIP of Rs 1000 just a month after the birth of your child. Deposit only Rs 1000 for one year. Next year you have to increase it by 10% of Rs 1000, i.e. Rs 100. This way your SIP will become Rs 1100 next year. Next year you have to increase it by 10% of Rs 1100, i.e. Rs 110, which means your SIP will become Rs 1210. Similarly, you have to add 10% to the current amount every year.
You have to run the SIP with this formula for 18 years. In this way, in 18 years you will invest a total of Rs 5,47,190. But the interest on this will be Rs 8,94,276 at the rate of 12 percent. In this way, after 18 years, you will get Rs 14,41,466 from SIP which you can spend on the necessary expenses of the child. On the other hand, if the return is higher i.e. up to 15 percent, then after 18 years you will get Rs 19,44,527.
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