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Jun 19, 2011

How To Invest For Kids

Saving for the child's future needs is one of the most important goals for Indian parents. An online survey conducted amongst 1,908 respondents by the Economic Times said that they started saving for their children education when they were born.
While this is good news,  the bad news is  that these parents are not always choosing the right option for their children. A large majority of such parents are opting for low yield  instruments. 

Almost 45% of the respondents  in the survey mentioned above said that  they invest in Public Provident Funds and Fixed Deposits for their children. This is primarily due to lack of awareness. 

Out of this, 26% of the parents have opted for child insurance plans that provide for the education of the child if any eventually strikes their parents.

The cost of raising a child in Urban India from cradle till college costs roughly Rs 55 lacs. The Calculation assumes that the child will take up a professional course costing Rs 10 lacs. This is the cost for today's prices and amount has to be adjusted for tomorrow inflation.

The most sensitive part is that education costs which constitutes around  46% of the total expense on a child, are growing at a worrying pace of 20-25% per year. 

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