10 Replies to “what would be the best method of money saving for a girl child age of 5yrs, I would like to plan for 15yrs.?”

  1. If it’s for education, your State probably offers some kind of plan that allows you to put in money (that be can’t touched until she’s in college) that will give you a really good interest rate.

  2. CDs are really good money makers when left in the bank for a while. They increase their yield exponentially by adding a percentage of a percentage every month. I have one, started with $ 1,500, five years later I’m up to $ 2,700. Some banks even let you add money to the CD whenever you want. Good stuff.

  3. Low risk investments, put $ 1000 in and leave it alone. Add in whatever you can every month or quarter. Even with $ 50 a month for 15 years thats $ 9000, if you figure you can double or triple that over time it will certainly help your daughter with school or other expenses.

  4. It really does depend on what is the final goal for the child. If you are planning to save for her college expenses, then you should consider opening up a College 529 plan within your state, or the state where the child might be going to college. The savings/investments grow tax free in that type of account and you have a wide array of investment options. Now, if it is just for the future without any real goal in mind, you could do a combination of things. You could open up a high yielding savings account (like at ING Direct), you could put some more in a long term Certificate of Deposit, and some more of the funds could be put into some type of Savings bonds, Treasury Bills or Treasury Notes. Even though everyone is scared to death of the stock market you have to consider at least putting a little bit of the money into a balanced-type (stocks/bonds) of mutual fund. You should use a technique called Dollar Cost Averaging, where you invest a fixed dollar amount (for example $ 50 every single month) until she is 18, and never change the amount or the frequency of deposits. The stock market cannot go down forever and it has shown over longer periods of time (10 or more years) to outperform other asset classes. By the time the child is 18, the money from all these different accounts will have accumulated where she will have enough money for college, or to purchase other necessities. I hope this helps and good luck saving for the little girl’s future!

  5. Why don’t you invest in a public provident fund account which will give you an 8% interest per year on cummulative basis.

  6. Suresh

    There are many Insurance companies which have launched children education / growth fund. You can get more details by browsing the schemes launched by ICICI prudential. LIC or Tata AIG

    Founder HRinIndia
    Indias Biggest HR Network
    HR Guru & Strategist
    Bangalore, India

  7. hey dude…………..as the market is goin on ………you definitely open up a couple of LIC policies ..its the best ….doesn’t matter what happens to the stock market or financial condition of nation …..you always safe with LIC ……..good luck

  8. Friend since you are planning long term you have some great options. let me explain 🙂

    Since this is for your child you need to ensure that the money that you save up does not get eroded. an ideal asset allocation for you could be a 60% in debt and 40% in equities.

    The 60% debt component would give you the much needed stability
    The 40% equity component would give you higher returns

    Reg debt components:
    In my opinion, since your investment horizon is 15 years, first open up a Public Provident fund account. You need to deposit a min of Rs. 500 every year to keep the account active. the max limit per annum is Rs. 70000. you can deposit any amount in between every year. Whenever you get surplus cash like a bonus or a gift park a portion of it in the PPF account

    Whenever you get surplus cash you can take a portion of it and open up fixed deposits in banks. banks these days are offering a staggering 10% or even more for FD’s.

    These 2 things should suffice for the debt component.

    Reg. the equity component:

    If you have exposure to the share market then you can opt to invest directly in equities but do not invest all the 40% equity part in this. invest only 10% of your investment directly in equities. Put the remaining in diversified equity mutual funds by means of a Systematic Investment Plan. SIP’s are the best ways to invest in MF’s because they help you average out the cost of investment because you keep buying when the market is up as well as down.

    Lets assume you are planning to invest 1 lac every year.

    which means debt = Rs. 60,000/-

    Put Rs. 30,000/- in your PPF account and open a FD for Rs. 30,000/-

    Equity = Rs. 40,000/-

    Buy some large cap share every year for Rs. 10,000/- (Say ICICI or L&T or Reliance industries are examples for Large caps)

    Open up a systematic investment plan in 2 diversified equity mutual funds. one for Rs. 1,500/- every month and another for Rs. 1,000/- every month. You can choose Sundaram select focus and HDFC top 200 as the two funds.

    If you intend on getting tax benefits on your income for this investment then you can choose ELSS mutual funds. in that case you can choose Sundaram BNP Paribas tax saver and Principal personal tax saver.

    To know what a mutual fund is checkout: http://anandvijayakumar.blogspot.com/2008/10/what-is-mutual-fund.html

    To know what is an equity share check out: http://anandvijayakumar.blogspot.com/2008/10/equity-shares.html

    To know what are the options of investments using which you can invest for your future as well as save income tax you can check: http://anandvijayakumar.blogspot.com/2008/10/saving-income-tax-through-investments.html

    All the best. Happy investing.

    mail me at [email protected] if you need any more details.

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