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Want to gift your child a Crore on their 18th birthday? Here’s how you can.

A crore goes a long way today but, even accounting for inflation, it is likely to command respect 12 years from now. This is the kind of leg up that your child can use, irrespective of their personal capabilities and situation.

Let’s face it for most of us, our children are our world. We want them to thrive and do so in a way they love. For most parents, a primary reason they even seek to increase their earnings or start investing is to provide a bright future for their children. This has remained true, especially in India, since decades.

What has changed though, is the fact that many individuals are now choosing to have children later in life. The reasons are many but one of the primary reasons for most is the need to stabilize and grow in their careers. A solid financial foundation is seen as being important before one starts a family.

Considering the cost of living in metros and big cities, a strong financial position is desirable for most families. For those who have attained that status of having a strong financial base, it becomes important to provide a jump start to their children in a world that is becoming ever more competitive.

A crore goes a long way today. Even accounting for inflation, it is likely to command respect 12 years from now. This is the kind of leg up that your child can use, irrespective of their personal capabilities and situation. This is a gift that can provide for a lot of needs that your child may have at that young yet challenging age when they are transitioning from teenage to adulthood.

What this plan needs

This goal requires you to invest in equity as an asset class. Only equity can provide a growth rate that is effective enough to reach this goal without compromising your finances unduly. The time frame, and return assumption, also means that you need to invest at least Rs 22,000 per month to reach the goal in time.

To sum up, you would need: 

  1. To invest Rs 22,000 each month, a sum that you need to increase by 10% each year
  2. 12 years
  3. A portfolio of good diversified (large cap as well as mid-cap) equity mutual funds
  4. Patience and conviction to weather the volatility of equity markets.
This plan is merely a guide as to what you can do. Depending on your situation you can modify this plan to reach the goal earlier or to save more. Implementing this plan will help you create a corpus that you can gift to your child, wholly or in parts, depending on the need your child faces.

Here’s what a plan can look like

The rate of return you are likely to see, and what we have assumed, is 12% annualised.

The corpus accumulated at the end of the year is assumed to be at the end of one year from the start of the investment date (Here, we assume your child has just entered their 6th year when you start investing for them).

The final word

This plan is merely a guide as to what you can do. Depending on your situation you can modify this plan to reach the goal earlier or to save more. Implementing this plan will help you create a corpus that you can gift to your child, wholly or in parts, depending on the need your child faces.

While you are investing for your child, don’t forget to invest for your retirement at the same time. Your retirement is a non-negotiable goal and everything else should be built around your retirement plans.

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