Thanks for visiting Capital Advisor. I frequently update this blog to cover various topics on personal finance such as investment strategies, financial products that you should buy and ones that you really should stay away from, financial calculators, emerging themes such as early retirement and financial independence, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.
The following post is a sponsored post.
Being a parent is the toughest job in the world. Caring for children, nurturing their talent and helping them fulfill their true potential is the biggest responsibility that every parent must shoulder. Parenthood is not about taking one or two big decisions correctly. Rather, helping your child reach the pinnacle of success is all about making smart decision in a consistent manner.
Being a good parent is not about leading a perfect life. That is impossible. Rather, a responsible parent is one who plans for potential problems, and ensures his or her child is secure even in the worst case scenario. Let me tell you how one small decision that I took many years ago helped my child’s future.
I decided to open a Recurring Deposit – It was a small decision that I took on an impulse. It was my daughter’s 5th birthday and I wanted to gift her something that would help her in the long run. However, even I did not know how my decision would transform her life.
I decided to invest Rs. 3,000 per month in a recurring deposit, and planned to let it run for as long as possible. Now, a RD offers the same interest as a Term deposit. So, you don’t really lose out on interest despite opting to invest your money in a recurring manner instead of making a lump sum deposit.
You can choose your RD’s tenure depending on your requirements. Most banks offer RDs for 12, 24, 36, 60, and 120 months. I opted for the 120-month deposit and ended up investing a sum of Rs. 3.6 lakhs over a span of ten years. The biggest benefit of this option was that the monthly deduction did not pinch my pocket, and allowed me to spend on my family without any restrictions.
After ten years, I received a maturity amount of Rs. 5.74 lakhs. As my 15-year old daughter showed signs of academic brilliance from a very young age, I decided to use a part of the maturity amount to invest in savings & investment plans to secure my child’s education.
The returns that the RD had provided proved very beneficial when my daughter was about to seek admission in an engineering college. I lost my job and struggled for four long years before I become financially stable again. The combination of the RD’s maturity amount and the investment plan funded my daughter’s education despite the fact that I was not earning anything throughout her engineering degree.
My farsighted decision helped my daughter hone her skills and study abroad with a full scholarship. A small amount of Rs. 3,000 per month made all the difference between success and a devastating failure.
Therefore, you should start planning to nurture your child’s future at a very young age. Remember, compounding offers benefits only if you let the investment grow for a very long time. Combining a 10-year RD with a 5-year RD can help you save money for your child’s future without compromising on your immediate requirements.
Rachita Kotian is an independent blogger and writing has been her passion for a long time. A literature major, she loves exploring the world of health, lifestyle, travel and finance. When she’s not writing, she’s most likely listening to music, cooking, surfing the web, or catching up on the latest flick.
Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.