The age of 18 is very important for the child’s career. In such a situation, if the financial support is strong, then it will be very easy for him to start higher education or a new business.
How to make your Child Crorepati: Every parent does financial planning for their child’s better future. One thing to always keep in mind is that the sooner you start investing, the sooner you get its benefits. If you start investing with a good strategy, then as soon as the child becomes an adult i.e. 18 years of age, you can prepare a big corpus of Rs 1 crore for him. The age of 18 is very important for the child’s career. In such a situation, if the financial support is strong, then it will be very easy for him to start higher education or a new business.
There are many investment options for children. But here it has to be seen that choose such a long term investment plan, in which you get tremendous benefit of compounding and corpus can be easily prepared according to the goal. 18 years is a long time and Mutual Fund SIP can be a good option for long term investment. There are many Mutual Fund schemes in the market in which the long term SIP returns have been 15% annual or more. In this regard, you can adopt the 18x15x10 rule or strategy.
Understand the 18x15x10 strategy?
If you are ready for SIP for the long term and have a target of creating a fund of Rs 1 crore when your child becomes an adult, then the 18x15x10 strategy in Mutual Funds can be helpful. This rule means that for 18 years, Rs 10,000 should be invested every month through SIP in such schemes in which interest is being received at the rate of 15% per annum.
SIP: Understand through calculations
According to the SIP calculator, if you do a monthly SIP of Rs 10,000 every month for 18 years and the estimated return on it is 15% per annum, then after 18 years you will have a fund of Rs 1.10 crore. During this period, your total investment will be Rs 21.60 lakh. Whereas, the estimated return will be around Rs 88.8 lakh.
SIP: Power of Compounding
The main purpose of the 18-15-15 strategy is to take advantage of the power of compounding. The longer the investment is, the greater will be the benefit of compounding. Therefore, it is beneficial to start investing as early as possible. Understand the power of compounding in the 18x15x10 strategy. If you do SIP for 10 years, then on maturity a fund of Rs 27,86,573 will be ready, whereas in 15 years this corpus can be Rs 67,68,631. On the other hand, after doing it for 18 years, you will have an estimated fund of Rs 1.1 crore. Actually, this is the power of compounding.
SIP: Understand the risk as well
There is always market risk involved in Mutual Fund SIP. The fluctuations in the market will affect your returns. Also, the past returns of a fund are never a guarantee of its future returns. Therefore, one should always choose the investment option based on age, goals, income and risk-taking ability.
(Disclaimer: The fund figures given here are based on SIP calculations. This is not an investment advice. Investment in mutual funds is subject to market risks. Consult your advisor before taking any investment decision.)
