[ninjatalli]

Hi Guys,
Starting a thread for bhpians to share their experiences on how each of us have done financial planning / investments for our respective children.

Note: This thread is not to expand on what each of us doing with our own financial planning (there's already a thread for that); and yes, definitely the funds are intended for our family too. But rather, this thread is to share what instruments and means of investments you have deployed in your child's name to specifically ensure your children future needs (e.g. college education, etc.) are met; or atleast they have a handy kitty to start with; without much of a tax implication (that any similar investments in our name would have).

There's a plethora of advice available online and yes, there are financial advisors who are the best to go for advice. But I'm looking to understand what steps bhpians have already taken up on this route; any key learnings / advice to share basis their experiences. There is an existing thread which was last updated in 2009; the only useful post in that thread I could find is this one by @Ravveendrra on how his father did financial planning/investments for him nearly half a century ago.

Looking forward to views of bhpians on this aspect.

[deathwalkr]

FDs and SIPs in my children's names. I guess that's about it

[Naetik30]

OT - Personally I feel there is not much advantage in investing specifically in your child's name. Even a savings bank account for a minor would be tagged to the parent/guardian.

There is no tax advantage for this. I think this thread would make more sense if it is focused on 'What investments for child's education/marriage'.

[libranof1987]

Just a quick suggestion: if you have a daughter, the Sukanya Samruddhi Yojana is a good investment scheme. Available just for the girl child, you can invest between Rs. 250 to 1.5 lakhs / year for 14 years. The amount can be withdrawn when she reaches 21 years of age (premature withdrawal allowed for marriage at 18). Current RoI is 8%.

[sreerknair]

I don't have plans to save anything for the kid per se. I consider any expenses for the Kid as my own monthly/yearly expenses and account them in my investment/saving plans. And so far I have included only education (not paid degrees) and medical expenses as part of it. I and wife do spend considerable "time" with the Kid as investment. Hope that will work out.

[deepak_misra]

Originally Posted by ninjatalli

Hi Guys,
Starting a thread for bhpians to share their experiences on how each of us have done financial planning / investments for our respective children.

This depends a little bit on if the corpus is meant for them to start life after breaking free from parents or as part of their education.
If it is part of education, it is just like any other goal. The time frame is different that's all. For year to year school fees, it is best just to keep it FD or FDs maturing around the time fee is due. For college etc., just follow asset allocation like any other goal depending on time frame. If fund required say 15+ years away, you can invest say 40% in an index fund and the rest in any debt instruments and keep decreasing equity allocation as the goal approaches. This might help beat inflation. But the strategy really depends on your risk profile.
I would deposit any cash gifts that children receive in PPF which is in their names. Opening a PPF is in my opinion a must as soon as a child is born. As of now the interest is tax free and reasonable. Please do note limits on PPF deposits. If they are minors, you need to club with your deposits

[NomadSK]

Originally Posted by ninjatalli

this thread is to share what instruments and means of investments you have deployed in your child's name

Personally, I have kept it very simple for my single girl kid (early teens), as I know my major expenses would be her higher education and her wedding, I have specifically created a corpus for that and kept in the FD's (not to be touched till needed), since I don’t want to play with the amount. That gives me a mental peace, which is very imperative to me and I can aggressively go with equities/MF's/SGB's.

Originally Posted by libranof1987

Just a quick suggestion: if you have a daughter, the Sukanya Samruddhi Yojana is a good investment scheme.

I missed this one as there is a clause "Account can be opened in the name of a girl child till she attains the age of 10 years." My daugther had already turned 11 by then.

[am1m]

I don't have kids, so forgive me if this is an unwelcome question, but is saving for a wedding really that relevant today? Are most kids these days still keen on big weddings, financed by the parents? Or are they more practical?

My wife and I paid for our own wedding. We had to wait a bit longer till we had the money, we had to invite far fewer people, and yes we pissed off both our sets of parents! It's a family joke that my mom is not smiling in any of the wedding snaps because she wasn't allowed to pay anything and we had to trim her guest list a lot.

But 15 years later, we both know we did the right thing. It was our wedding, a celebration of the start of our marriage. The people who really mattered showed up and they would have shown up even if we didn't spend even whatever we did. And I'm really proud that we paid for it. (And 15 years later, no one remembers the details of what we spent on anyway!)

[deepak_misra]

Originally Posted by am1m

I don't have kids, so forgive me if this is an unwelcome question, but is saving for a wedding really that relevant today? Are most kids these days still keen on big weddings, financed by the parents? Or are they more practical?

Yes/No/Depends

It is better to save and if not needed can be gifted to the child or appropriated for other goals

Whether relevant or not, it really depends on the circumstances

[NomadSK]

Originally Posted by am1m

but is saving for a wedding really that relevant today? Are most kids these days still keen on big weddings, financed by the parents? Or are they more practical?

I believe in India saving for wedding would always be relevant, call it our cultural needs. In 2023, it was a 160B Dollar industry and is 4th biggest. I will not open the pandora box of destination wedding, which I had been to recently. Few decades back it was considered to be OK to have Bollywood type weddings, now with present dispensation and with high disposable income, people are going for destination weddings, that’s the flavor of the town, who knows what will be next

It’s not the present gen kids who are keen on big lavish spending, it’s the parents who wants to splurge. Very rare people do think this in a "Practical" manner.

Apologies if it went OT.

[ghodlur]

SIP in mutual fund is the best way for the investments towards children's education and marriage expenses.

I did a mistake of investing around 72k annually in Jeevan Saral to support after 12th education expenses and still continuing it. Every year I plan to surrender the policy but home minister thinks otherwise. Planning to withdraw the amount in 2024 and move the corpus to a Hybrid mutual fund as my son is an year away from the college scenario.

Have opened an savings account for my son and depositing money every month to meet his current travel expense. He's managing the account on his own and occasionally seeks advice for budget vs actual expenses.

[antz.bin]

So, I've got this plan for my 4-year-old kiddo. Wanna see if I can make it work.

I'm paying off my house right now and I've got about 14 years left before she hits 18. My aim? Save up enough to snag a decent 2BHK pad near my own place or in the city where she'll go to college. Nothing super fancy, just a good place.

By the time she finishes college, I'll have most of that new place paid off. After she's done with college, she can crash at the flat or rent it out and handle any remaining loan. That way, she's got her own property and isn't blowing cash on rent. Plus, she starts saving early and gets some tax benefits.

And hey, if you manage to clear the flat payments yourself, you cover her rent for life! Imagine that for a wedding gift! I wish someone did that for me, seriously. You could go for Mutual Funds, sure, but can you live in those? Think about it, how big a portfolio do you need just to cover your rent with dividends while also beating inflation?

Once that's sorted, my kiddo (and her partner) can chip in however much they want for their wedding. They've always got a roof over their heads no matter what. If they want something fancier later on, they can sell the 2BHK and get whatever floats their boat.

Look, our kids are always our kids, even after they tie the knot. With the crazy real estate scene, unless they're rocking the top 1% in their field, I doubt they'll climb the financial ladder 5-8 years into their careers without a little help from well-off parents. Real estate prices? Don't even get me started on how nuts that'll be by then!

[deathwalkr]

Originally Posted by Naetik30

OT - Personally I feel there is not much advantage in investing specifically in your child's name. Even a savings bank account for a minor would be tagged to the parent/guardian.

There is no tax advantage for this. I think this thread would make more sense if it is focused on 'What investments for child's education/marriage'.

I think that having those investments in your child's name makes you a bit cautious when it comes to closing said investment for some random expense that comes up.

[raksrules]

I don't have any specific method of investing for my kids but I have invested in PPF but ideally I should have done it in my kid's names instead of mine and wife's. Due to this, I cannot open any more PPF accounts. I am not sure if PPF account can be transferred to someone else's name but mostly cannot.

One mistake I have done which I would insist people to not do is to invest in any LOCK IN children mutual fund plan. The lock in is so that people don't haphazardly remove the money but if you are disciplined, you don't need this policing.
The lock in is 5 years from investment or child turning 18 years, whatever comes first. Due to this, I have 3L "stuck" in a mutual fund which I cannot withdraw / switch until 2027. I can just hope this fund performs better and gives decent returns to at least justify lock in.

[HighOnSpeed]

For the average Indian, equity is best long term investment instrument available today. Best passive investment fund to consider would be NIFTY 50(no-brainer). You can park you money(if lumpsum) or go the monthly SIP route for the next 10-15 years and ride the India growth story. India is statistically said to climb to one of top 3 spots of the Global Economies, so naturally an investor in the business space will be a direct beneficiary of this growth. Before taking any unsolicited advice from anyone on this forum, it is recommended one consults a financial advisor to see what suits their goals/needs.