Looking for the best investment optionsfor taking care of your child’s education expenses? Here are 5 key steps to selecting the best child investment vehicle.
#1 Save for investing
After setting the financial goal of saving for your child’s future, you must start saving early. This way, you’ll set aside a larger sum for investing, and after investing, the money will gain from the power of compounding.
#2 Choose a suitable fund
Investing in equity mutual funds online with a long-term investment strategy is a smart choice. Equity mutual funds generate good returns by parking your funds in the stocks of companies across different market capitalisations. While equity funds are riskier, investing for the long term can gain you higher returns.
Equity mutual funds invest exclusively in equity securities. Sometimes, to leverage better market opportunities, they make a small allocation in scash or equivalent instruments.
Before investing, you can use a SIP calculator to determine how much money you need to accomplish your goal, i.e., pay for your child’s educational expenses.
Debt funds park your funds in fixed-income instruments, like treasury bills, commercial papers, government securities, corporate bonds, and other money market instruments. Before deciding on a systematic investment plan for the long term, consider choosing the debt funds depending on the bonds’ credit quality. Always try to invest in debt funds with AAA-rated bonds.
Buying Gold ETF
The next on the list of best investment plan to save for children’s goals is purchasing gold. Nowadays, you can invest in gold in a more cost-effective way through gold exchange-traded funds (ETF). Gold ETFs symbolise paper gold and are almost similar to purchasing MF units. Here, you buy and sell Gold ETFs on a stock exchange (NSE or BSE) where gold remains the underlying asset.
Finally, NRI investment options for securing your child’s future also includes hybrid mutual funds. Hybrid MF schemes invest in more than one asset class. Typically, they comprise equity assets, gold, debt assets, and even real estate. Hybrid funds build your wealth through asset allocation, diversification, and correlation.
#3 Check the fund’s track record
Before investing, remember to factor in the expense ratio of the fund you’ve chosen, which shouldn’t be high. Check the fund’s track record over three to five years and only invest if the performance has been consistently strong.
Additional Read: What is Goal-Based Financial Planning?
#4 Create a solid portfolio
For a goal 4-8 years away, you can create a core portfolio with well-faring equity MF schemes across large-cap and mid-cap funds to earn solid returns.
If you invest in hybrid funds, your investment risk is minimised as hybrid schemes diversify within multiple asset classes to score maximum returns.
#5 Start investing
As you can see, investing in equity, debt, hybrid mutual funds, and gold ETFs are well suited for securing your child’s future and taking care of educational and other expenses. Start your investment journey with a smart one-stop solution to indulge in goal-based investing; download the Moneyfy app today.