For your child’s future plan i.e. education, lifestyle, marriage etc. – there are multiple choices available today. That also means that you need to choose the right mix wisely. We can certainly say that it is no child’s play.

Investing in random options of investment may not help to achieve the plans. You need to evaluate and choose the appropriate investment avenues at the right time so as to meet your financial goals.

Also, you need to hit an asset allocation balance as you move further on to path of each of the financial goals with respect to children’s better future. For many of us this is one of the most critical part of overall financial plan; we would explain it further.

Let’s get started…

Why Plan For Child’s Future!

We are sure each one of us wish to give our little bundle of joy the best education and get him/her married in style, then it’s a must to plan for their bright future right from today.
Just the way we plan for their schooling and studies during exam and personality development, we need to plan well for all their future aspirations.

Smart Investment Choice

There are galore of investment avenues for planning for your child’s future. But selecting the right product mix (such as equity, debt and gold) can be a daunting task. Moreover, you need to monitor the portfolio on a regular basis as you move further towards each of the financial goal set for your children’s better future.

Child’s Education

“Education is the most powerful weapon which you can use to change the world.” – Nelson Mandela

You give the best clothes, the best vacations, the best games etc… in short, the best of everything in life to your child. But you see, the most precious is the best education; actually it will be best assets you can gift.

Child’s Marriage

The wedding of their child is a dream for every parents and they want to make one of the most memorable occasions of kid’s life. In India, weddings are considered to be festival/gathering of people with fun-filled, colourful and musical events.
But along with all of this, another important thing attached to weddings is “Big Expenses”.

Now consider a case of Mrs Shah. Mrs Shah has a daughter aged 2. She wants to be ready with a corpus for marriage that should be when her daughter is 24 years. Currently, Mrs Shah wishes that she would spend Rs 15 lakhs on the marriage as per today’s expenses. So, let’s determine how much she would need to invest, every month, for her daughter’s marriage to get her married after 22 years?

Current age of Daughter 2 years
Cost of Marriage in today’s time Rs 15 lakhs
Time to Marriage 22 years
Inflation 10% p.a.
Future Cost of marriage Rs 1.22 Crores
Amount Mrs Shah need to invest today Rs 9,516 per month

Considering the inflation, the corpus Mrs Shah would require for her daughter’s marriage will rise to Rs 1.22 crores, as per future value calculations. She will have need to make investments worth Rs 9,516 every month to achieve the same, which can fetch a return of 12% per annum.

And lets say, if Mrs Shah delays this investment by 5 years, and starts to invest for her daughter’s marriage after 5 years from now, she would need to invest almost double i.e. Rs 18,464 per month. You see, the earlier you start, the less you’ll need to invest each month to achieve the same amount of money.

So, by now you must have understood why it is necessary for you to plan for child related expenses in advance. But planning for these expenses is not the end. You must ensure that you execute the plan by investing wisely and also monitor your plan.

Importance of Insurance in Kids Future Planning

You may have invested in various asset classes, say SIP, lumpsum, Large Cap or Mid cap and others to achieve all the financial goals for your kids.Therefore any irregularity or sudden stop to the monthly contributions to these investments can endanger the future plans. To ensure this doesn’t happen, one has to have a cover the insurance.

Mutual Funds For Child’s Future Planning

Sangeeta had a piggy bank as a gift from her grandfather 2 years ago. And, Sangeeta has been practicing the concept of saving money ever since. When Sangeeta’s piggy bank was near full, she asked her parents to break it. To her surprise, she had collected a sum of Rs 5500, and was very happy to see and wanted to buy a video game out and insisted for the same.

Sangeeta’s parents, instead of blindly honouring her wish, introduced her to the “value of money” and invested in mutual funds in her name. Yes, it’s right. You can invest in the name of your children as well, let’s find out how:

Mutual Fund investing for minors

Investment in Mutual fund can be done in the name of the minor children. There is no restriction on age limit or amount that can be invested.Parents or a legal guardian can invest and transact on behalf of a minor child. Let us tell you What Documents are needed for investing in the name of your child.

  • It is necessary to have document for your child’s age.
  • Document relating your relationship with child.
  • It is mandatory for the guardian/parent (s) to comply with KYC regulations.
  • Your bank account details. As the investment will route through your account (as a parent/guardian),
  • Third-Party Declaration Form along with your bank’s acknowledgement letter. Alternatively, it can be routed through your child’s bank account, if it is there, with an acknowledgement from bank.

What happens when your child turns 18?

It is important to note that the funds can be withdrawn from the child’s mutual fund till the time he attains age of 18. Once he/she attains the age of 18, parent or guardian cannot withdraw the amount. So, first step is to get his/her PAN and KYC formalities. And also change his/her bank account to the status of a major from minor. Your SIP instruction will be valid only until the day your child attains majority even if your SIP is perpetual.

So, be wise while you’re planning to invest in mutual funds for your child’s future. Take the right decisions.


Child’s future planning is not a “child’s play” as easy as it might appear. It is much more than just keeping money for his/her future.It starts from instilling the habit, very important for his future, of saving in your children.When you let your kids understand the value of money, they themselves start expending wisely from early on.

This will also make them less demanding and help them understand the value of hard earned money.

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