What is SIP for a Child?
A Systematic Investment Plan (SIP) for a child is a disciplined way to save and invest regularly for a child’s future financial needs, like education or marriage. Parents can start a SIP in mutual funds and invest small amounts monthly or quarterly. Over time, these investments grow through the power of compounding, helping build a significant corpus. What’s unique is that both parents and children can invest together. As children grow older, they can continue the SIP started by their parents, creating a habit of financial discipline and long-term wealth creation.
SIP Calculator
Monthly Investment
₹22.4 L
Top Funds with High Returns (Past 7 Years)
18.11%
High Growth Fund
17.8%
Top 200 Fund
13.97%
Accelerator Mid-Cap Fund II
14.53%
Opportunities Fund
9.16%
Equity II Fund
12.86%
Accelerator Fund
14.32%
Growth Opportunities Plus Fund
15.24%
Multiplier
11.57%
Equity Top 250 Fund
12.76%
Future Apex Fund
12.02%
Opportunities Fund
14.09%
Frontline Equity Fund
15.2%
Virtue II
10.49%
Pension Dynamic Equity Fund
12.03%
Equity Optimiser Pension
10.05%
Blue-Chip Equity Fund
How an SIP for Child Work?
SIP is an excellent way to save for your child’s future while building financial discipline. Following steps show how an best SIP plan for child works:
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Set Clear Financial Goals: Decide the goal, like your child’s education or marriage, and calculate how much money you need and by when.
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Pick the Right Mutual Fund: Choose a fund that matches your risk level and time frame, such as equity funds or child-specific funds for long-term growth.
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Invest Regularly: Parents can invest each month, and older children can also start a SIP with their savings or pocket money, helping them learn financial habits.
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Benefit from Compounding: With SIPs, money grows over time through compounding, making early investments more valuable in the long run.
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Get Tax Benefits: Certain funds like ELSS offer tax deductions under Section 80C, and returns are taxed based on how long you hold the investment.
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Review and Increase Investments: Check the progress regularly and increase the SIP amount as your goals or inflation changes.
SIP Calculator to Estimate Investment Amount for Child
A SIP calculator helps you calculate how much you need to invest regularly for your child's future goals like education or marriage. Parents can use this tool to decide the right amount to invest and how long to invest.
Key Points to Consider Before Investing in a SIP for Child
Keep the following points in mind before starting to invest in a SIP for child:
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Start Early: Start investing as early as possible so your money can grow over time with the power of compounding.
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Set Clear Goals: Decide what you are saving for, like your child’s education or marriage, and set a target amount and time frame.
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Pick the Right Fund: Choose a mutual fund that suits your risk level and time frame, such as equity or child-focused funds for long-term growth.
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Decide on SIP Amount: Pick an amount you can invest regularly without strain, keeping in mind your budget and future needs.
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Tax Savings: Some SIPs, like ULIP and ELSS, offer tax benefits under Section 80C, which helps you save on taxes while investing.
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Monitor Your Investment: Keep track of how your SIP is performing and make changes if needed to stay on track with your goals.
Conclusion
A SIP for your child is a smart and disciplined way to secure their financial future. It allows parents and even children to invest regularly and benefit from the power of compounding. SIPs continue to be a popular option for long-term goals like education or marriage, offering flexibility and steady growth. By starting early, parents and children can build a strong financial corpus together, making it a collaborative journey towards achieving dreams while cultivating healthy financial habits.
FAQs
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What is SIP for child?
SIP for child is a Systematic Investment Plan where parents or children invest regularly in mutual funds to build a corpus for future goals like education.
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Can children invest in SIP for child?
Yes, children can invest in SIP for child under the guidance of their parents or guardians by opening a minor's mutual fund account.
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Why should I invest in SIP for child?
SIP for child helps accumulate funds systematically for your child’s future needs, like education or marriage.
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How does SIP for child benefit children directly?
SIP for child teaches financial discipline to children and helps them understand the importance of saving and investing early.
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What are the benefits of starting SIP for child early?
Starting SIP for child early maximizes the power of compounding, enabling larger wealth creation with small investments over time.
