An individual should have a well-defined and well-thought plan for his/her child’s future. Right from education to marriage and risk coverage, everything should be well planned. While every parent starts worrying from early days, we believe, is a good sign but mere worrying alone will not help.

Here are 10 Basic Rules That Will Help You Secure Your Child’s Future:

1. The Power of Compounding 

Should you wish to generate a corpus for your child’s education 15 years from now, you should not rely on FD, 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% 15%
Monthly SIP Rs 29431 Rs 21011 Rs16224

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

2. Start 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 his/her favor.See below how starting early helps you reach Rs 1 crore corpus:

SIP Tenure

18 years 15 years 12 years

8 years

Yield 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.

3. Keep Your Child Insured

The SIP idea is good, if you start early and invest through equity. By doing this, you are likely to accumulate enough corpus. But given that life is unpredictable and you do not know what may happen tomorrow, it is good to add an insurance plan to your child’s portfolio in a way that his/her education plan is not impacted.

4. 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 planning for children’s corpus.

We believe that high rate of inflation should never daunt an individual if time is on their side, as higher time horizon provides compounding benefit.

5. Protect goals 

When sacrosanct goals such as a child’s education, marriage etc. are concerned, it makes sense to ensure you have these goals covered separately in addition to the 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.

6. Opt For a Premium Waiver Plan

In the event of an unfortunate demise of the parent or guardian of a 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.

7. 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 their investment is of a horizon greater than 10 years. Thumb rule says that for Child Education and Marriage – Small & Midcap Funds.

8. Always Have a Partial Withdrawal Plan in The Portfolio

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

9. 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.

10. Review Your Plan 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 includes – 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 as soon as a baby is born, they start planning for their child’s future. At the center of these investments, lie the thought of providing world-class education and benefits to children.

Should you have any queries with respect to planning your child’s financial future, feel free to write to us and we will be glad to assist. You may leave us any investment related message/query on Facebook, Whatsapp, Twitter or on our website.

Happy Investing!

Disclaimer: The views written in this blog post are the author’s alone and does not reflect that of Groww.