If you take the 40-60 year old, the biggest, or the toughest thing that he/ she has done is to buy a house. Especially for those nearer 60 years – their salaries were not so high, so they struggled more.

So obviously now they want to make it easy for their kids to live their lives. This is but natural for a parent to want to buy a house for their kids. So a person with 2 children tries to buy 2 flats – one for each kid.

Just think hard, does it make sense? I have nothing against people buying nice assets for their kids, but why a house? Why real estate?

If your kid is about 8 years old, why would you want to buy a house for her/ him NOW?

Are you living in the same house that your father bought? Even better have you YOURSELF not changed houses? Have you not changed cities? Have you not shifted from say a Ghatkopar to a Mulund or Thane or Vashi?

Why should you assume that they will live in a house that you bought? – I do not like an answer which says…that ‘at that point they can sell this house and buy a new one’ – it cuts no ice.

My suggestion is simple. Give them assets like equity mutual funds. Keep doing a SIP in an equity fund when your kid is born..and step up every year. Thus when a kid is BORN you start a SIP in say, a balanced fund with 65% in equity and 35% in debt for Rs. 15000 per month. And you do a step up of say 10% per annum.

Now this amount will be available to you till the kid turns 18, and to the kid till he/ she turns 100! There is no reason to touch this amount except when the kid feels it is necessary. So she could use it for her higher education, buying a car or as a down payment for a house.

Assuming she earns well and is generally well provided, and has passed the marshmallow test, she might just use it for her OWN retirement.

Can you even imagine what amount would have been accumulated at the end of say 65 years?

Imagine what are you gifting your kid?

65 years of compounding. Go to www.freefincal.com and find out what amounts would have been accumulated at her age of 19, 22, 28, 40, 50 and 65. Assume that the annual step up of 10% continues – you stop when when she starts earning – and she continues to do the SIP and the step up 🙂

The number is not funny. Assume an IRR of say 10% – which itself is high – when you assume such a big n.

Go have fun.

Here for the lazier people : If you start with a monthly SIP of Rs. 15000, and increased the amount by 10% every year, and the fund grew at 14%  over the next 10 years, the amount would be Rs. 38 Lakhs. At age 20 your kid will have Rs. 24 lakhs, at age 40 your kid will have Rs. 50 lakhs, and at age 65 for the kid she will have Rs. 80 crores. Not  bad at all…


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  1. hi Subra

    Great article again. For investing in a MF SIP do you think we should invest in a index fund or a diversified fund. Since we are investing for the long term , an diversified fund which is doing well for the past few years may not do so well in the future. Maybe the fund manager changes or its invested in some “wrong” companies causing the fund to not do well.

    Your thoughts

  2. Hi Subra

    2 Factors

    If i am gonna invest through out my life, my children will also do the sme, then who will spend?

    What is the guarantee that my children will not withdraw when they become adult

  3. How is compounding applicable to Stocks? What if the companies go bankrupt? How can we trust stock market that has most of the money coming from foreign countries? They can pull their money anytime.

  4. how to protect accumulated wealth for 65 years. if anything happened in between who will take care. irrespective of the persons how to take care the wealth?

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