Saturday, 19 September, 2009

Investment Advice - Especially for parents with young children

Investment Advice - Especially for parents with young children

Identify a suitable Equity MF (Nifty BEES would be a good idea) and start putting at least a token amount of 100-500 per month in the names of every child below the age of 21 regularly (dividend payout option) - Make it a compulsory stuff for the next few years - till the child reaches the age of 21. The results (due to the power of compounding) will be amazing by the time they reach college. Don't bother about clubbing of income because income will arise only if the MF is sold. Which, ideally, you should not do at all!

Analyse the likely result using an Excel Sheet to find out the likely cumulative amount available at the age of 21, assuming annual returns of 12, 15, 18%. You'll be zapped by the result.

By the way, the above idea is likely to be equally relevant even for adults who are planning to add a "surprise bonus" for their twilight years!

And, those of you who think that the "Growth option" in mutual funds would be a better idea, please ask me why I'm dead against the same. That'll be a good topic for another post on this blog.



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Chandrashekar said...

magnificient, right advise and thoughtful one as well for all the parents.

Thanks and Best Regards
L Chandrasekar

N said...

Thanks, LC - Nice to know that you found this useful. Pl pass it on to your friends so that they can take a look at the blog. N

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