Is the 18x15x12 formula the secret to smart investing for your child?
A recent article about becoming a “Crorepati" by simply investing in the Public Provident Fund (PPF) has caught many people’s attention. The catch is “The investor must be willing to stay invested for 30 years". In a country, where there are more Dream11 subscribers than mutual fund investors, the proclivity to earn money quickly is palpable.
Imagine the plight of parents who want to save for their children’s higher education but can afford to invest only for the coming 18 years! There is no way you can convince them to put their money in government securities or centre-backed schemes that are safe but need time to grow their money.
The need to start investing in mutual funds then becomes evident in the light of proper financial planning. For those who are unfamiliar with investing, mutual funds can be a great way to gradually accumulate wealth. First off, a mutual fund is a group of funds that are invested in a range of securities, including stocks, bonds, and combinations of these, and are overseen by a qualified fund manager. Purchasing mutual fund units essentially makes you the owner of a tiny portion of the entire portfolio. Mutual funds come in a variety of forms to suit a range of risk appetites and financial goals.
In the face of inflation, investing in a stock fund would be insufficient. You must have a comprehensive financial strategy in place. For example, you can make your child a millionaire by the age of 18 by investing in the 18x15x12.
A popular method for illustrating the potential of systematic investment plans (SIPs) for long-term investing, particularly when saving for a child’s future, is the 18x15x12 formula. Let’s dissect the formula:
The following are some crucial things to remember when using
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