Children Plan: If you start this work right from the birth of the child, you will have a fund of ₹50 lakh, like this..
Saving Plan For Children: It's common for parents to create a separate fund in their children's name for long-term goals, such as their education or marriage. This fund often starts with a small amount received on birthdays or special occasions, and then parents regularly add to it over time. Experts also consider this a good approach. Today, we're telling you about children's funds in mutual funds.
What's a good approach?
Various schemes
A reliable investment approach.
For example, in the field of children's mutual funds, we consider the ICICI Prudential Children's Fund. This is a scheme with a long and reliable track record and has delivered good returns over time. It's an open-ended investment plan designed for children. It has a minimum lock-in period of five years, or when the child attains majority, whichever is earlier. This fund invests in both equity and debt assets, and offers the freedom to invest in non-benchmark instruments as needed. The highlight of this scheme is its adaptive investment approach. It doesn't adhere to a fixed investment formula, but instead adopts a defensive or aggressive approach based on market conditions. This allows the fund manager to occasionally take counter-movements based on the economic environment, maintaining flexibility and vitality in the portfolio.
Works in the Market
When market stability is needed, this fund can shift up to 35% of its holdings to debt. And when the environment is favorable, it can also return to equities at the same pace. This provides both leverage for growth opportunities and mitigates the impact of volatility during uncertain times. Overall, this children's fund is a good option for parents who seek a balanced mix of flexibility, proactive decision-making, and long-term thinking in their children's investment plans.
What are the returns?
If an individual had invested ₹10 lakh in ICICI Prudential Children's Fund on August 31, 2001, the amount would have grown to approximately ₹3.3 crore by October 31, 2025. This represents a remarkable annual compounded growth of 15.58%. In comparison, a similar investment in the benchmark would have been worth approximately ₹2.12 crore, yielding a CAGR of 13.46%. The fund's SIP returns have also been impressive. If a monthly SIP of ₹10,000 was made from the beginning, the total investment of ₹29 lakh would have grown to ₹2.2 crore by October 31, 2025. If the investment had been made for the past 15 years, the contribution of ₹18 lakh would have grown to ₹55.4 lakh. This translates to a CAGR of 13.76%. Its benchmark's return over the same period is only 11.88%. The fund has consistently outperformed its benchmark over the past one, three, and five years.
Why Early Investing Is Important
Suppose a parent wants to build a corpus of ₹50 lakh by the time their child turns 18. If the first parent (A) starts investing at the time of the child's birth, they would need to invest ₹6,598 per month over 18 years at an assumed growth rate of 12%, resulting in a total contribution of ₹14.25 lakh. If the second parent (B) starts investing when the child turns six, they would need to invest ₹15,671 per month over 12 years, resulting in a total contribution of ₹22.56 lakh. If the third parent (C) starts investing when the child turns 12, they would need to invest ₹47,751 per month over 12 years, resulting in a total contribution of ₹34.38 lakh.
That is, even though the goal may be the same, those who delay pay a much higher price. Parent B will have to invest ₹12.3 lakh more than Parent A, and Parent C will have to invest ₹20.13 lakh more. This is the true cost of delaying investment. In the end, it all comes down to the same thing: the earlier the investment is started, the more effective the power of long-term equity investments. If parents want, they can create a bright future for their children, as bright as their dreams, at a very steady pace. They just need to make the right decisions and start at the right time, today.
Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
