Not Just Saving—Investing Is Essential Too! Teach Children the Importance of SIPs and Mutual Funds..
In this era of rising inflation, merely saving money is not enough; investing it in the right avenues has become essential. While people in the past considered their savings secure simply by stashing money in a piggy bank, financial experts today advise strengthening one's future through small, strategic investments. In particular, options such as SIPs (Systematic Investment Plans) and Mutual Funds are now regarded as excellent tools for cultivating the habit of investing among children.
**Starting Small is Possible**
Financial advisor Abhishek Kumar Singh noted that money kept in a piggy bank constitutes mere savings; it does not grow. He emphasized the importance of explaining to children and the younger generation that, rather than simply accumulating and holding onto money, one should put it to work so that it can appreciate over time. He added that, in today's environment, numerous investment options—such as Mutual Funds, Index Funds, and ETFs—are available, allowing individuals to start investing with even a modest amount.
**Investments Can Begin with Just ₹100**
He pointed out that while Fixed Deposits (FDs) often require a minimum threshold amount for investment, anyone can begin investing in Mutual Funds with as little as ₹100. Regular investments made through a SIP offer the benefit of compounding, a process through which even small sums can grow into a substantial corpus over the long term. He further highlighted that instilling the habit of investing in children can prove to be immensely beneficial for their future.
**Funds Can Be Withdrawn When Needed**
Abhishek Kumar Singh explained that this process fosters financial discipline and monetary literacy in children right from their early years. He noted that, under Indian law, an individual is eligible to make investments in their own name upon attaining the age of 18. However, for children under the age of 18, investments can be made through their parents or legal guardians. Such investments are typically held "under guardianship." He stated that once the child turns 18, they can take full control of and manage the invested funds themselves; before that, however, the guardian retains the authority to withdraw the money should the need arise.
Potential for Better Returns
Furthermore, he noted that initiating investments in a child's name fosters a sense of responsibility toward the future. Discussing investment options, he suggested that Index Funds could be a superior choice for children over the long term. Additionally, one could consider investing in Small-Cap Funds, which offer the potential for higher returns. He emphasized that starting to invest at the right time can secure and strengthen a child's financial future.
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