Imagine a mother bird carefully picking out the best twigs and straws to build a nest. Just like her, you need to build a robust investment nest for your children’s future. ETFs (Exchange-Traded Funds) could be an ideal twig for this nest.
- Open a Minor Account: First, you’ll need to open an investment account under your child’s name. You’ll act as the guardian until they come of age.
- Automate Contributions: Consistency is key. Most platforms allow you to set up automated SIP (Systematic Investment Plans) into ETFs. This way, a specific amount of money is invested periodically without you having to lift a finger.
- Diversification: ETFs are generally diversified, but make sure you pick ones that fit into the broader asset allocation plan for your child. Use the LSG framework of Jama Wealth, advocating judicious allocation based on liquidity, safety, and growth.
- Risk Tolerance: Since this is a long-term game, higher-risk ETFs that align with growth might be beneficial early on, but as your child grows, adjust to more conservative options.
- Avoid insurance linked investments: Do not mix the both; simply take term life insurance for protection, and do not fall for sale pitches that appeal to emotions for child. Keep costs lesser and simple.
- Review and Rebalance: Markets are like the seasons; they change. Make it a point to review the portfolio annually.
To sum up, the goal is to build a nest egg that benefits your child in the long run. Be the wise bird. Peter Lynch said, “Know what you own, and know why you own it.”
Practical Tip: Make this a family affair. Educate your child about the importance of saving and investing as they grow older. If you’re unsure about starting this journey alone, consider reaching out to Jama Wealth’s PMS services and SEBI Registered Investment Advisor services for expert advice.
