What Is The Best Way To Invest Small Amounts Every Month For Your Child?
What Is The Best Way To Invest Small Amounts Every Month For Your Child?
If you are a father and plan to build a corpus for her by investing small amounts every month, there are many options. If you start early you are able to get the benefit of compounding which may be very handy and useful to build a solid corpus.
SIPs in a mutual fund scheme Let's assume that you have a daughter of around 1-10 years and want to invest in a Systematic Investment Plan (SIP) for a period of 10-20 years. If you look at the returns of the mutual fund schemes in the same period you would realize that some if the biggest funds have generated a solid return during the period. In fact, the returns are the best as compared to many asset classes, particularly bank deposits.
Name of the fund & 10 year returns 20 year returns are as follows
HDFC Equity 17% 20%
Reliance Equity 20.70% NA
ICICI Prudential Value 19.74% NA
Birla Sun Life Frontline Equity 17.7% NA
As can be seen from the above table the returns from mutual funds, even if you invest a lump sum you can get a sizeable corpus, though SIP would be a more prudent route.
Systematic Investment Plan (SIP): 5 Benefits Of Investing
Systematic Investment Plans (SIP) is a method of investing a fixed sum on regular pre-specified basis, in a mutual fund scheme. When investing a fixed sum, it allows you to buy units on a particular date each month, which will help in saving each month. By investing in SIP, individual will there by average out costs of investing and will benefit from the power of compounding. Individuals have the option to choose between quantity-based and amount based SIPs from Stocks, Mutual Funds, ETFs and Gold.
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