My discussion with my colleague continued for some more time and ultimately we agreed on a very simple plan for his daughter. From the month she was born father will be depositing a princely sum of Rs 1000/- per month for his princess in some good equity mutual funds. Only equity mutual funds will be used to investment. Once the daughter is 2 years he will invest Rs 2000/month for the next year and then 3000/- for the next year so on he will keep on adding 1000/- per month on every birthday of the kid and will continue to do the same till the daughter is 10 years of age and so he would have invested a total of Rs 660000/ by the time princess is 10 years old and then he can stop investing any further. The invested 660000 by that time would have already grown to substantial sum and would continue to grow till the time it is not touched. You don’t even have to rebalance your portfolio or anything unless any one of the fund is doing really bad, as long as the funds are giving a return of only 12% per annum you can keep them untouched. I will give. You will be amazed to know how much the humble 1000/ month start would have reached by the time princess is in her early twenties. I will upload the same in the next blog. Thanks for reading so far.
Posted by Prasad Np