Mr Dubey, who is in his 40s, wants to make his grandson’s first birthday special. Unlike planning for a big birthday bash or giving him an expensive gift, he wants to invest money in his name that can provide financial assistance for his higher education plans.
Like Mr Dubey, many individuals want to leave a legacy for their grandchildren with regular investments with an aim for a financially better future. But knowing how to invest for grandchildren via mutual funds is the next important thing. This complete guide will take you through the possible ways to choose the best possible investment for grandchildren according to the risk appetite and investment horizon.
Why Should You Invest for Your Grandchildren?
Most people develop a strong bond with their grandchildren and want them to get all the happiness they deserve. However, with the cost of raising children rising every year, it’s not quite easy to be financially ready to raise one or more kids.
Take the case of elementary education, which has changed considerably over the years. Look at the fees that schools once used to charge when you were a kid versus the current educational expenses. The large difference between the two makes you think twice about investing for grandchildren now in mutual fund .
Fortunately, the best investment for grandchildren does not have to be bigger to get started. You can start an SIP for several financial goals related to your grandchildren, including their higher education or marriage.
Common Expenses Your Grandchildren Will Face
College tuition fees
Extra coaching classes and counselling for education
Training programs to develop their skillset.
Apprenticeships
Latest technology in the form of smart devices
All these aspects weren’t a part of a child’s life when you were in school. But these days, they are inevitable. The best way to invest for grandchildren is to pay off the long-term expenses and aim to protect for their future. This is where the right selection of mutual funds plays a vital role. You can select the schemes that may best suit your financial needs for your grandkids.
Ways to Invest in Mutual Funds for Your Grandchildren
You can continue investing for grandchildren via:
Investing money in your name
Via this approach, there is no upper limit to the amount you can invest. When making a mutual fund investment, you need to add your grandkid as a nominee. For KYC, only your documents will be required. If your grandchild is a minor, the related operations will only be handled by the parent or kid’s guardian until they reach 18. This is because minors are not allowed to manage their investments and the KYC details of their parent or guardian should be provided.
Now that you know how to start investing for grandchildren, it’s time for some tips and advice.
Tips to Invest in Mutual Funds to Benefit Your Grandchildren
Explore various grandchildren investment options in different mutual fund categories before finalising to invest in any scheme. The more you know about different schemes and how they work, the better decision you can make.
Make sure you select a longer investment horizon to give your investments enough time to possibly grow with the power of compounding.
Consider your risk appetite before making the investment for grandchildren. This will allow you to prevent panic selling of your mutual fund units during unfavourable market conditions.
Disclaimer:
The information here in is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Mutual Fund Investments are subject to market risks, read all the scheme related documents carefully.
