From the moment your baby is born, parents must think about investing for their future. With global economy having up & down swings and no real stability in sight, it is important to have a mixed bag of investments to be able to balance risk and return.
Bank Savings: With meager interest rates, stacking up your bank balance will lead to nowhere in 15 or 20 years when your child might need the money. Nevertheless it is important to maintain some cash in the bank for short-term requirements or unforeseen needs.
Life Insurance: Secure your child’s future by getting a Life Insurance in the name of the earning parent. Remember a life insurance kicks in only if there is a sudden demise. Getting a life insurance in your child’s name may not be very productive as for the parent it’s the child that matters more than the money received after the loss.
Mutual Funds: A mutual fund is a good investment tool as it is a hybrid of equity and debt components. There are multiple options based on the risk you are willing to take. Mutual fund investing is managed by investment professionals and the investments are made in various sector like steel, infrastructure, pharma, oil, etc. In some cases there is a minimum lock-in period. You should invest in a mutual fund based on your risk tolerance. The big advantage is that you do not have tp manage investing in different asset classes as this is done by the mutual fund manager.
Systematic Investment Plans (SIP): You can open a SIP with your bank where you decide to invest a set amount each month for a defined period. A SIP takes away the risk associated with lumpsum investing. It allows you to balance out your cost in a volatile market and generating good returns in the longer term.