Planning for a child’s future, especially education costs, is a key concern for parents. Nehal Mota, Co-founder & CEO of Finovate, recommends investing in index funds for long-term financial growth. With over 10 years before a child starts their career, index funds offer a simple and effective investment strategy.
These funds, like those tracking the Nifty 50 and Sensex, minimize the risks associated with fund managers and are cost-efficient. The Sensex has historically provided around 16-17% CAGR over the last 44 years. Abhishek Banerjee from Lotusdew points out that India’s strong economic indicators, including high forex reserves, make it a promising investment landscape.
Starting early with index funds can lead to substantial returns. For example, a monthly SIP of ₹20,000, initiated when a child is two, could grow to ₹1.04 crore by age 17. Mota stresses the importance of beginning investments early and staying consistent.
While index funds are a smart choice due to their low costs and tax benefits, investors should keep in mind the potential for market fluctuations. Atul Shinghal, CEO of Scripbox, highlights that equities have historically outperformed inflation, making them a good option for long-term wealth building.
