May 14, 2019 5 min read

How to Plan Financially for Child Birth With Mutual Funds?

Create a financial plan for child birth with the best mutual funds.

Children are the most important assets for everyone, and each and every person want to give their child a great and stable future. Now, to give a good future everybody plan something for their child, but one particular factor that they miss in their planning is the right timing. Starting investments at the right time is really important as the right timing helps in reducing the panic and also the risk associated with the investments.

Now in recent times, one of the most trending ways of financial planning for a child is mutual funds, and the best time to start the investments is before the birth of your child. With inflation continuously eating the savings, mutual funds have provided a way through which investors can generate inflation beating returns. In this blog, the top mutual funds for childbirth planning will be discussed, but before that let’s take a look at what are the things that you will have to plan for.

Why Financial Planning For Your Child’s Birth is Important?

The cost of child birth continuously increasing, and if an individual doesn’t have proper financial planning, it can put a lot of burden on the financials. Now, as you may know, that giving birth to a child is not a single day task, so to ease up the planning, let’s divide it into three phases, which are:

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Pre Delivery

The time before the delivery can get a bit expensive as it includes some of the major tasks such as routine check-ups, the cost of medicines, maintaining good nutrition, etc. The pre delivery budget depends on a lot of factors, such as the medical institution you are opting, the type of diet that you are asked to follow, the maternity leave policy at your workplace, etc. So, creating a prior plan is extremely important.

During the Time in Hospital

Now, the major task is the delivery of your baby, and it will cost you the most. In India, the cost of regular birth can range between Rs. 15,000 - Rs. 75,000, whereas the cost of C-section can range from Rs. 25000 - Rs. 200,000. This range will increase with the passing time, so based on the insurance policy, you have to manage your investments accordingly.

Post Delivery

The post-delivery check ups, the vaccination of the newborn, and getting the basic amenities for your child can also cost a considerable amount of money. So, including these factors in your financial plan is also very necessary.

ICICI Prudential Child Care Fund- Gift Plan (G)

Basic Details
Category Hybrid: Aggressive Hybrid
Benchmark NIFTY 50 Hybrid Composite Debt 65:35
Launch Date 31-Aug-01
Asset Size Rs. 633 crore (As on Mar 31, 2019)
Expense Ratio 2.75% (As on Mar 31, 2019)
Minimum Investment Rs. 5000
Minimum SIP Rs. 100
Return Since Inception 15.98%
Exit Load 0

ICICI Prudential Child Care Fund is a child future specific plan, launched with the aim to provide investors with an optimal way to plan investments for their child. The scheme has provided benchmark beating returns over the course of years. The scheme invests in a mix of equity (71.85%), debt (5.23%), and cash (22.93%) instruments. As for the stock picking, it prefers quality over quantity and has investments in just 18 stocks. In the equities, growth stocks are preferred, and the opportunities from different sectors are picked with finance being the most favored one. In the debt space, AAA rated instruments are preferred so a stable growth can be provided. Perfect schemes for investors with a low to moderate risk appetite. The best part about this scheme is that there is no exit load so high liquidity can be enjoyed.

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SBI Magnum Children’s Benefit Fund (G)

Basic Details
Category Hybrid: Conservative Hybrid
Benchmark NIFTY 50 Hybrid Composite Debt 15:85
Launch Date 21-Feb-02
Asset Size Rs. 63 crore (As on Apr 30, 2019)
Expense Ratio 2.47% (As on Mar 31, 2019)
Minimum Investment Rs. 5000
Minimum SIP Rs. 500
Return Since Inception 10.41%
Exit Load 3% for redemption within 365 days, 2% for 366-730 days, and 1% between 731-1095 days

SBI Magnum Children’s Benefit Fund is a scheme being from the conservative hybrid category invests predominantly in the debt space, which makes it suitable for the childbirth planning goal. At present, the scheme is investing 66.86% of the total investments in debt space, 22.59% in the equity space, and the rest 10.55% in cash & cash equivalents. The stock picking is focused on current investments in 23 stocks. In the debt space, instruments with medium credit quality and interest rate sensitivity are chosen, and in the equity space, mid cap oriented growth stocks are favored. The overall investment style helps the scheme in providing risk-adjusted returns to investors.

Now, from the above two schemes you can choose one that fits your investment style and risk appetite. The best part about these schemes is that, after your child birth goal gets fulfilled, you can use the same schemes for the future planning of your child. For a better planning, you can use the SIP calculator available at the website. In case of any query, feel free to connect with the experts.

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