How to secure your child's future?
The initial celebrations on the arrival of a child gradually leads to a sober reflection on how best to ensure his / her comfortable upbringing and education. Investment advisor Ramganesh Iyer addresses the finance aspect of this concern.
April 06, 2009 / 03:29 PM IST
On at least one aspect, I think several of the insurance company advertisements have got it spot on. The initial celebrations on the arrival of the child gradually leads to a more sober reflection on how best to ensure his / her comfortable upbringing and education. Doubtless, finances are but one aspect of this concern; but they are an important one! Moreover, they are probably much easier addressed than some of the softer and other cultural aspects of parenting.
Investment is distinct from Savings
Savings simply mean you set aside a portion of your income for future use. Yet, it is (careful and planned) investing that makes maximum use of these savings and optimizes your portfolio in later years. This is especially important since inflation tends to erode the purchasing power of money over a period of time. A headline inflation of 6%-7%, actually translates into a lifestyle inflation of 10%. Thus, if your money is lying in a deposit fetching 7% interest rate, you are actually eroding wealth!