5 Things To Do After Your Child Is Born

  Author: Jai Prakash

So, you are on cloud nine as you hold your newborn child in your arms. Do you know that this is also the right time to get started to secure her present and future. Here are five things you need to do to ensure that.

Ensure adequate life and health insurance With the addition of one more member in your family, you need to ensure that you little one is secure from all risks, whether it is to your life or any health episode. This is the right time to enhance your life and health insurance coverage.

Open a kids’ bank account You can open children’s bank account. Such an account in the name of the child is available in most banks. This is quite useful since you can park all cash gifts that the child gets from time to time. You can also deposit your savings for the child before you invest them in various investments.

Go for a PPF account Open a Public Provident Fund (PPF) account in the name of your child in a post office or any major bank. You will benefit from its high security, typically interest rates and tax deductions for contributions under Section 80C, besides tax exemptions for interest and maturity proceeds.

 Invest in equities via mutual funds You also need to get started investing for the child’s higher education. Typically, educational costs grow faster than general inflation. In the 10 year period, 2005 to 2015, costs for some courses actually grew by as much six times. During 2007-14, educational costs in major Indian cities doubled. Even if we assume lower growth in costs, a course costing about Rs 12.5 lakh would become Rs 50 lakh if the educational costs rise by 8 per cent every year.

Clearly, you need to invest in high growth investments like equity mutual funds that typically grow your money faster than rising costs over 8-10 years or more. You can invest small amounts regularly through systematic investment plans (SIPs).  Let’s assume you need Rs 50 lakh when your child turns 18. If you start investing in your child’s first year, you will reach your target if you save Rs 7,800 every month, assuming your money grows at 11% annually. As with all investments for long term needs, sooner you start, you can save the amount required even by making small investments.

Update your nominations Your insurance plans and investments from your hard earned money needs to go to your loved ones, especially your little one, in case something were to happen to you. Ensure all nominations for investments and insurance plans are updated, with your spouse ideally being the nominee. Make a Will to ensure your family’s uninterrupted access to your money in your absence. 

With all major goals it is important to get a headstart. Once you get that there’s no looking back. You can give your child an edge which she deserves by doing these five things soon after her birth.