Inflation may be down to zero but the average expense of a household is constantly growing. The early generations had it simple. Competition was less and education was simple. In the future, global education may become cut-throat and fees will get higher and higher. Soon you will need to make a decision of where to send your kid for higher education. Will you as a parent be able to fund the higher studies of your child? Well, if you plan well and take the right steps, then you can. So, what is the best way to invest for child to give him/her a good future?
Table of Contents
Be an early bird
The first step is to start early. Even if you save $5 a day, your money will multiply vigorously because of the power of compounding. You can make ten thousands with small savings and investment, if done wisely. But because inflation is constantly rising, you need to compound your money for a longer time period. Hence you should start as early as possible.
A late start will yield low corpus and also jeopardize your fiscal objectives. So, as soon as you hold your child in your hands, right after his/ her, you should start making investment plans for them.
Pick the right options
Starting early isn’t sufficient, you should make the right investment to get optimum returns. Check out the stocks of the developing companies which are going to witness growth in the coming decade. Look out for their growth potential and then calculate the returns. Once you are sure about their performance and guaranteed returns from investment, you can proceed.
When you make investment for such a long time period, volatility gets flattened out. So, all you need to do is focus on the growth of the company for the next 10 to 20 years.
Play safe if you are going for short term
If your kid is already a teenager, and you have less than 5 years, then you should go for stocks which are going to offer returns in short term. Whether you want to short or long, it depends on you. However, remember short term investment involves more risk.
Review the portfolio
Once your portfolio is ready, make sure you review it once every year. You should see if your stocks are meeting the goals or not. Make changes if you think some other stock is worth investing in. Monitor your goals periodically. If you have saved more money, then you can invest more. The more you invest, the better it is for your kid.
The best thing you can do is educate your kids while reviewing these stocks to make them learn about investment and stock and also enhance their interest. As a parent, you can become the custodian of their stock investment and then give them the investments once they are mature. Loved gives you the luxury to invest stocks for your kids right from their young age in a custodial account and educate them about it. Once they are mature, you can get the account transferred to their name. So sign up now and commence planning your kid’s future.