CHILD MARRIAGE PLAN
Weddings are synonyms with colorful and musical events, marking an important occasion in your child’s life. This is one of the most important and rather the most expensive event that both families have to cover up.
Thus, it is vital to find and follow the right approach towards planning future finances. A planned approach should help with a stress free event.
Let’s consider a couple of steps for the same:
–Start Early
Starting early is important as it provides one with a larger time horizon for building a substantial corpus. The longer the time, the bigger the benefit from compounding. Let’s look at a chart for a better vision:
Child’s Age | 2 years |
Marriage costs today | Rs 15 lakhs |
Time Left | 22 years |
Inflation Rate | ~10% |
Cost at marriage | Rs 1.22 Crores |
Amount to be invested per month | Rs 9,516 |
Rational Estimation
We should be aware of our personal finances, and plan out periodic investments keeping the inflation in mind. The earlier you start; the lesser amount you will have to invest for your financial goals.
–Asset Allocation that Suits you
Work on building a portfolio basis your asset allocation. You can allocate depending on factors such as age, risk, income, risk appetite, etc.
A well-defined allocation can deal with market conditions as you reach for your goals.
Let’s discuss a scenario below:
Time Horizon | Equity | Debt | Gold |
10 + years | 90% | 0% | 10% |
8-10 years | 80% | 10% | 10% |
5-8 years | 70% | 20% | 10% |
3-5 years | 40% | 55% | 5% |
0-3 years | 10% | 85% | 5% |
*Table for illustration purpose only (Source: PersonalFN)
–Invest Smart
Savings are never enough, investing in Mutual funds via SIP is a must do for all, as with SIP one can instill the habit of saving regularly. Systematic investment in funds for a good period of time leads to a huge amount in savings.
–Get Insured
Ensuring optimal insurance is a necessary step that everybody should take in life. Accidents do happen, and they are unforeseen. Don’t let your family suffer, be smart as a parent and invest well.
–Avoid Debt Creation
Debt is one of the most troublesome thing that a person or a family can go through. Debts usually occur during major life events such as Marriages or Foreign Education, and people often spend more than their savings allow leading to bad Debt.
That being said, we should plan everything out as soon as we start earning, and thus avoid making quick and bad decisions.