Investing TIPS for children: Edelweiss MF CEO Radhika Gupta

On popular request…’ investing TIPS for children: Edelweiss MF CEO Radhika Gupta
Radhika Gupta, Managing Director and CEO of Edelweiss Mutual Fund, recently shared valuable advice for parents seeking to kickstart their children’s investment journeys. In her X post formerly twitter she share, “On popular request, some quick thoughts on investing for a child… “. Here are the complete details below regarding her insights.

Radhika Gupta, Managing Director and CEO of Edelweiss Mutual Fund, recently shared valuable advice for parents seeking to kickstart their children’s investment journeys. Here’s a what she shared:

  1. Get the docs done – birth certificate, Aadhar, PAN and then bank account. Actually very easy to do for a minor.
  2. Try to find a goal – higher education is one – to save for. Break it down into the number of years you have to figure out an investment amount.
  3. Do monthly SIPs. 2-3 funds work. Can use a large / mid index fund for broad market exposure, mid and small cap funds to add risk, and an international fund if you are thinking study abroad to manage currency. ,94 those who asked you can do all this without a children’s specific fund like gift etc.
  4. Review this periodically as goals change, make it more conservative as you get closer to the goal. Involve the child in the process as they are old enough to understand.
  5. This isn’t a perfect process and you can easily create your own. But it’s enough to start. Finally encourage those who gift to gift units or SIPs to kids. I know the pain of having three ball pools and four strollers as gifts and storing them in a Mumbai home. Financial gifts are productive and take less space 🙂

Which, in a simpler sense, is decoded as:

Get the documents in order: Begin by gathering essential documents such as the child’s birth certificate, Aadhar card, and PAN card. Setting up a bank account for a minor is a straightforward process and should be prioritized.

Define a goal: Identify a specific financial goal for your child’s future, such as funding higher education. Break down this goal into manageable chunks based on the number of years available until the target date. This will help determine the required investment amount.

Start with monthly SIPs: Consider initiating monthly Systematic Investment Plans (SIPs) in 2-3 mutual funds. Opt for a combination that provides broad market exposure, such as large/mid-cap index funds, along with mid and small-cap funds to introduce a level of risk. Additionally, if there’s a possibility of studying abroad, consider including an international fund to manage currency fluctuations.

Regularly review and adjust: Periodically reassess the investment strategy as goals evolve over time. As the target date approaches, consider shifting to a more conservative investment approach to safeguard accumulated funds. If the child is old enough, involve them in the process to help them understand the importance of financial planning.

Flexibility is key: Understand that there’s no one-size-fits-all approach to investing for children. Feel free to customize the investment strategy according to your preferences and financial circumstances. The most important step is to start the investment journey, even if it’s not perfect, as it lays the foundation for future financial security.

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