Child Mutual Funds: Where to invest for the better future of the child, which plan will be the best?

Although we save to meet the needs of our children, the question that remains before us is where to invest to get good returns.

Today's parents prioritize many goals for their children even before marriage - such as higher education, be it engineering and medical or MBA and international studies. The expenses incurred on these have also become as expensive as the cost of marriage. Now parents need to invest wisely in such options that give them good returns that can meet the needs of their children. Apart from this, they also need to pay attention to the fact that the investment amount is in sync with the rising inflation and helps the children to move forward.

Earlier parents preferred to invest in National Savings Certificates or long-term fixed deposit schemes, but now they should invest in child plans in mutual funds keeping in mind inflation and returns.

When it comes to fulfilling the dreams of their child, parents are not ready to compromise on quality. On the other hand, the cost of education is skyrocketing. Inflation in education services is almost double the Consumer Price Index numbers declared by the government. In such a situation, if proper planning is not done, then the problems can increase a lot and children can miss the opportunity.

Suresh Soni, CEO of Baroda BNP Paribas Asset Management India

Equity is a better option.

Parents saving for the future of their children need investment options that can beat inflation. In such a situation, equity has proven to be the asset class with the highest real return over a decade or more. Research shows that long-term equity investment can give so much return, which no other asset class gives.

For example, if you invest Rs 9,000 every month in a well-performing equity fund for 20 years continuously, then after 20 years a fund of more than Rs 1 crore can be created.

A child plan in a mutual fund is beneficial.

Children's scheme offered by mutual funds is a better option for financial planning for children. Most of these mutual fund plans have a lock-in period of 5 years. This promotes long-term investment. Long-term investment gives the benefit of compounding, due to which the money of investors can increase manifold.

How to start investing

Starting investing early and investing regularly is important for those parents who want to save enough for their child's future. A Systematic Investment Plan (SIP) is a better option to invest in children's funds offered by mutual funds, in which a fixed amount is invested every month.

Apart from this, step-up SIP is also a good option. In this, you can increase the monthly contribution. Understand it like this if your salary today is Rs 50,000, then you are doing an SIP of Rs 10,000. Now in the future, as your salary increases you can also increase the amount of SIP. In this way, you can create a big fund for your child.

Investing in a child plan of a mutual fund is not just about money. It is a step that parents take to fulfill their child's dreams.