If you are looking for some investment opportunities to secure your kid’s future, then consider investing in mutual funds. Following the right strategy for mutual funds will help you make substantial funds before your kid turns 18. You won't have to compromise with their dreams only because of the lack of funds as this strategy will ensure that your child gets admission in university of their choice.

Follow the 18-15-12 formula for mutual fund investments. Investing in SIP every month after the birth of your child can be a smart financial decision. As per the strategy, you will have to invest for a period of 18 years. By the time your child turns 18, a fund of Rs 1 crore will be waiting for them to utilize. 

18-15-12 formula explained

In this investment formula, 18 represents the number of investment years. 15 represents the monthly SIP amount which is Rs 15,000. And the 12 signifies the expected annual interest rate. 

Right after the birth of your child, start investing in SIP in the child’s name. Every month, save Rs 15,000 from your earnings, and invest that amount consistently for a duration of 18 years. 

Doing the maths, your total investment over a period of 18 years will amount to Rs 32,40,000. With an interest rate of 12 percent, the total interest earned over this period will be Rs 82,41,589. 

Rs 1 crore funds

When your child turns 18, they will have a total of Rs 1,14,81,589 including the invested amount with the interest earned. With this substantial fund, you can easily fulfil their educational and other needs. 

Benefits of SIP

Financial experts suggest that consistent investment in SIPs can offer greater advantages. 12 percent is the average interest rate that is applied on investments. If you find opportunities with a better interest rate, then you will be able to build more funds. However, before making any kind of investment, always consult your financial advisor. Educate yourself about market trends and then make an informed decision.