An individual should have a well-defined and well-thought plan for his/her child’s future. Right from education, marriage and risk coverage, everything must be well planned. While every parent starts worrying about their child from an early age, not many actually do something about it. 

Here we present to you ten basic rules that will help you secure child’s future:

  1. Use the Power of Compounding to Reach Your Goal

    Should you wish to generate a corpus for your child’s education 15 years from now, you should not rely on FD alone, but switch to equity dominated mutual funds which offer higher growth rate in the range of 12-15% (conservative rate). The table below shows, how you can generate a corpus of Rs 1 crore by investing in different instruments.


Debt Fund Balanced Funds Equity Funds

CAGR Yield (%)

8% 12%


Monthly SIP Rs 29431 Rs 21011


The key here is to focus on equities and adopt a systematic investment planning (SIP) approach.

  1. Starting Early

    The biggest rule is to start as early as possible. In an ideal case, an individual should start saving right after the child is born so that time can work in their favor. The below table shows how starting early helps you reach Rs 1 crore corpus:

SIP Tenure

18 years 15 years 12 years

8 years


15% 15% 15% 15%
SIP required Rs 10179 Rs 16224 Rs 26617

Rs 56237

As we can see from the table above, the earlier you start better you earn and the key is to make time work for investment.

  1. Keep Your Child Insured

    You are likely to accumulate enough corpus if you start early and invest in equity. But given that life is unpredictable and you do not know what the future holds, it is good to add an insurance plan to your child’s portfolio in a way that his/her education plan is not impacted.

  1. Factor Inflation While Planning

    National Sample Survey Office conducted a research and stated that cost of any professional degree/course nearly doubles in six years. An individual while planning should also take into account this inflation rate while strategizing for a child’s corpus fund. We believe that high rate of inflation should never daunt an individual if time is on their side.

  2. Know Your Goals  

    When sacrosanct goals such as children’s education, children’s marriage etc. are concerned, it makes sense to ensure you have these goals covered separately in addition to term plan, which you may choose to purchase for your child. Ideally, you should take up separate term plans that safeguard important goals in your child’s life such as education.

  3. Opt for a Premium Waiver Plan

    In the event of an unfortunate demise of a parent or guardian, the child insurance providers tend to waive off the premium. Thus, it makes sense to opt for premium waiver plan while planning any insurance for children.

  4. Save Aggressively 

    If you start an early investment for your child, it makes sense to invest in high risk, high return funds that have potential to outperform other asset classes handsomely, albeit at the cost of a higher risk. We believe an investor should avoid fixed return savings schemes if your investment horizon is greater than 10 years.

    Thumb rule says that for Child Education and Marriage – Small & Midcap Funds sahi hai! Check out top small-cap funds here.

  5. Always Have a Partial Withdrawal Plan in the Portfolio

    An emergency can knock at your door anytime. It is better an individual is well prepared for the same. There should be a provision for partial withdrawal from the child plan or there should be some fund that is liquid enough for such situations. It helps to avoid any unwanted financial disturbance due to an emergency.

  6. Always Appoint a Nominee 

    Death comes uninvited and it is the inevitable truth of life. Hence, it is very important to choose a nominee on whom you can rely. This person shall be responsible for getting the claim amount until your child turns into an adult.

  7. Review Your Investment At Regular Intervals

    Investors generally tend to start a plan and leave it on auto mode. However, it is important that you track your investments and review the performance of your investments at regular intervals.
    Some of the questions you can ask while reviewing investment include – has education cost gone up? Is your investment accumulation on track to achieve the goal, etc.


It is true that all parents wish the best for their children and typically as soon as a baby is born, parents start planning for his or her future. At the center of these investments, lie the thought of providing world-class education and benefits to their children. That’s why it is paramount for parents to start planning for their child’s future well in advance.

Happy Investing!

Disclaimer: The views expressed here are of the author and do not reflect those of Groww.