From Ordinary to Extraordinary: Create an INR 100 Crore Legacy for your kids using SIPs
In this age of 30-second reels and instant gratification, we all find ourselves chasing quick wealth, right? But here’s the thing: our desire for instant riches must match the reality of achieving financial stability.
This mismatch can lead to financial anxiety, especially when we try to cut back on our current lifestyle to secure a better future for our children, their education, and, of course, for ourselves.
This is hard to hear, isn’t it?
But not impossible to achieve. Read on to learn what you can do to become financially independent, especially if you’re a parent!
Building wealth requires discipline and healthy financial habits right from the start. There’s no escaping that fact!
Unfortunately, many of us only realize the importance of being financially disciplined when we’ve already spent a significant part of our lives, well, undisciplined with money. It hits the most when we realize that for SIPs to help you create wealth, time is the most significant factor.
How can parents ensure that their children have a better future?
Consider this example: If you invest INR 3,000 monthly in a SIP with a 12% compounding, it could potentially be worth over INR 100 crores by the time your child reaches 68 years old. Yes, it’s a long time, but there are no magically guaranteed shortcuts to achieve the same result.
However, there is a practical and more straightforward alternative based on calculations.
If you are willing to dream of INR 100 crore for your child, continue the monthly SIP and teach your children the value of investing early.
Maintain the SIPs until your child turns 18 and advise them to continue with their earnings. Here’s the exciting part – To speed up the journey, consider adding a SIP Top-Up of just Rs. 500 annually. It may seem small, but this simple action can reduce the timeline by 7 years.
Summing it up, here’s your action plan:
- Start a monthly SIP.
- Opt for an automatic annual SIP amount increase of INR 500.
- Enjoy the benefits without burning a hole in your bank account.
It would help if you also remembered that this journey may not always be smooth. There may be years of low or negative returns, and consistent 12% annual growth is not guaranteed.
However, over the past 42 years, Indian markets have generated a CAGR of more than 15%.
Consult a financial advisor to understand the power of compounding and long-term investing even better. They can also help you analyze how changes in the SIP amount or top-up can affect the timeline for reaching your financial goal.
Lastly, remember, focus on what you can control the input and don’t overthink the output. In Hindi, we say, “कर्म करो, फल की चिंता मत करो |” It’s time to adhere to the beautiful belief!