Secure your child’s future with planned investments

Ask any parent; what is the single most important thing to you in your life? Most would say "the future of our children".

Naturally you want to give the best to your children. You want to see the future that you have been dreaming about through the eyes of your children. You dream for them the dreams that you perhaps could not achieve yourselves. That is why you are so emotionally concerned about the future of your children. Rajiv Sharma feels the same way for his daughter Riya who is 1 year old. Rajiv is 34, he and his wife together earn about R 7 lakh per annum. But that is not so important.

What is notable is that he has created for Riya assets worth R 6.75 lakh. First let us understand what he did to achieve this and why he did this. Before she was born he put aside R 6.25 lakh for her. What did he do? He had investments in his name and decided that some equity shares and mutual funds now belong to Riya. To make things formal he opened a bank account in her name and then transferred the money there and continued with the same investments. So far he has made a profit of R 50,000. What is interesting is his grand plan, which is to gift her R 2 crore by the time she turns 25.

He did not need any mathematician or agent or broker to tell him that expecting a compounded rate of return of 15 per cent p.a. for investment in shares and equity mutual funds R 6.25 lakh would become approximately R 2 crore. It is that simple!

Now let's get into his mind and explore his logic.

First he wanted to gift her R 2 crore and with his assumptions of 15 per cent returns, which is realistic. There is no chance in my opinion that this will not happen.

... contd.

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