We bring you a real-life investment journey on the occasion of Children’s day week. Investing for child education goals is one of the priority for any Indian family.
Our esteemed client Mr. D (name changed), a salaried person, started investing for his daughter when she was in school. He began investing regularly for Ms. A. Our approach was to invest monthly for this particular goal.
As seen in the image below, he started with SIP (Systematic Investment Plan) approach. Mr. D began with Rs.35k monthly investment for 2 years as his cashflows were good. After 2 years, he continued to invest in the same fund for 5k monthly SIP for 4 years. Thus the total investment in the same fund accumulated close to Rs.10,84,000/-.
Today Ms. A is pursuing her graduation and has plans for post-graduation outside India; she already has a kitty of Rs.37lakhs to choose for a good higher education. The compounded average returns earned on this investment is 12.22%.
This is a simple story of believing in the investment, staying put across market cycles to reap the long term benefits of equity investing. The focus was to build a corpus for a purpose.
Today we suggest many parents take the same approach of investing regularly to accumulate sizeable education corpus. For serious money to make, the investment has to go through two-three market cycles. If the objective of the investment is clear, staying invested for the long term will even out the volatility.
To sum up – One needs to invest in the long term for long term goals, need to be with suitable investments (not chasing extraordinary returns but consistency in performance), and above all, be patient.
The following famous Warren Buffet quote rightly sums up Mr D’s investment Journey of 12+years in the same fund.
“Someone is sitting in the shade today because someone planted a tree a long time ago.”