Investing for your child should begin from the day of their birth because compound growth works best with this approach. The period between birth and college allows compound growth during which your investments can magnificently increase in value. When you invest at birth with a 12% annual return, your investment amount could become Rs 25,92,000 in 18 years while capital gains amount to Rs 59,48,743 thus resulting in a total worth of Rs 85,40,743. Continued investment for 2 additional years will result in a total investment amount of Rs. 28,80,000 after which the estimated capital gains will be Rs 81,58,288 and the corpus will expand to Rs 1,10,38,288.
When your child is born you start an SIP with Rs.1,00,000 that you maintain continuously for 18 years. The corpus you can obtain from a 12 percent annual return stands as follows: Two additional years of investment will produce Rs 20,00,000 in total investment and Rs 60,69,873.55 in estimated capital gains leading to Rs 80,69,873.55 in estimated corpus. You are expected to have a total investment of Rs 20,00,000 along with estimated capital gains of Rs 60,69,873.55 and an eventual corpus of Rs 80,69,873.55 after 20 years.
On the other hand, your estimated capital gains will be Rs 13,37,993 and your final corpus value will be Rs 15,37,993 in 18 years. Furthermore, by investing Rs 5,00,000 with 12 percent annualised returns on your investments you could generate. Thus you could accumulate a corpus of Rs 38,44,983 from an 18-year investment. The total estimated capital gains from the investment will reach Rs 33,44,983 while the total estimated value will be Rs 38,44,983 at the end of 18 years. The capital gains over 2 additional years would total Rs 43,23,147 leading to an estimated corpus of Rs 48,23,147. Your investment value increases exponentially during the number of years it spends compounding.
Your money will grow faster if you either invest your money for two additional years or let your single snapshot investment accumulate for an extra two years. If your child reaches 18 years old or invests at a later age then they can accumulate a considerable amount for their education. The high cost of education prompts parents to invest this Rs 1,80,000 at their child’s 18th birthday which can eventually become Rs 2.10 crore at retirement. The post-tax returns are estimated at 12 percent annually through a period that extends from age 18 to age 60. The same one-time investment of Rs 1,80,000 today will result in estimated capital gains of Rs 2,08,30,164.72 and a final corpus value of Rs 2,10,10,164.72 arriving in 42 years. The following section shows the calculated results. The investment of Rs 1,80,000 in 42 years will result in capital gains of Rs 5,78,61,568.66 along with an estimated value of Rs 5,83,61,568.66.
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