The most common worry on everyone’s mind these days is the rising prices of consumer items. While it is often a pleasant thought that costs might come down soon, realistically – the chances of that happening are rather slim. In such cases, the best you can do is be prepared for the worst. But how do you prepare? It often happens that while you set aside some money, it’s often necessary to use it for something else.
And even the money that you get from investments is often used for purposes other than saving for the future. One solution you can embrace is that of investing and allowing your money to grow – in the name of your child. Mutual funds have come up with the idea of a goal oriented investment that allows you to grow your money in direct relation to what your needs – or rather your child’s needs – might be in the future.
The usual mode is that people tend to invest their money in equities but then withdraw it for fear of their volatility. But the truth is that the volatility affects the investor all the more adversely because it is used in the short-term. In the long-term, the volatility is generally balanced out by the returns that the funds receive. Because most investors don’t stick it out in the long-term – they end up losing out. But if you were to grasp this opportunity and harness it to your own advantage – you could make a very neat profit.
Mutual funds allow you to do this is through children’s plans. Most investors lack the dedicated discipline required for successful investing – but children’s plans tend to have a better response than many other plans. This is because of what is at stake for the investor – the child’s future. People that invest in child plans tend to reduce their withdrawals from this fund – or avoid withdrawals altogether and allow money to grow as it should. This is using equities to their best potential. Usually, child plans allow you to allocate your money into several categories; this way you can easily recognise whether the portfolio is performing to what you require of it and how you can adjust it in terms of either length of investment or amount.
Another advantage is that considering your goals are going to be long-term, you can be as aggressive as you want with your investments, the long-term allowing you a leeway that short-term goals rarely allow.
Just keep in mind before you choose to invest in a child plan that you tend to have a heavy exit load in such plans to dissuade investors from withdrawing money from such a plan.