Every parent wants to give their children the best possible start in life. Today, that means far more than good food and a decent school. It means building the right foundations early, choosing the right learning environment, and preparing for an education path that opens global doors. In a world where degrees are abundant and competition is relentless, the name on the college gate matters. It influences peers, confidence, and long-term opportunities.
The challenge is blunt. Education costs rise faster than general inflation in many parts of India. The education component of the Consumer Price Index has been climbing for years. At the same time, families now spend far more on schooling and higher studies than they did a decade ago. The message is simple: every year of delay makes high-quality education more expensive and harder to secure.
This is why children’s funds play a useful role. A children’s fund is a mutual fund designed to build money for a child’s future needs. This could be school, college, or advanced studies. A children’s fund offers one structured vehicle with a single purpose: prepare for the child’s future.
Children’s funds work because they mix long-term equity growth, stabilising debt, and disciplined management. Equity compounds over years, debt cushions volatility, and fund managers follow clear frameworks to deliver steady progress. The result is a calm, goal-focused path that builds wealth without the stress of a trading-style rollercoaster.
Old methods often fail to beat education inflation. Fixed deposits and scattered savings are easy to dip into whenever a sudden expense arises, whether for a holiday or a family event. Once withdrawn, the education plan falls off track.
These funds come with a mandatory lock-in of at least five years or until the child turns 18 (whichever is earlier).</span> This feature builds discipline and stops impulse spending. The lock-in feature may sound inconvenient, but for a child’s long-term goal it is an advantage. It stops panic exits during market falls and prevents the fund from becoming a source for day-to-day spending. It allows compounding to do its work without interruption.
Gold and FDs may preserve value, but over long periods they rarely produce high real returns. When college fees rise at high single or even double digits, preservation is not enough. Equity-oriented children’s funds offer a better chance of keeping pace with rising costs.
A bigger advantage is psychological. These funds are goal-based. Money is marked for a specific purpose. When the goal reads ‘Daughter’s Education 2038’, parents think twice before touching it. Labelling drives behaviour.
How Much Should Parents Save?
There is no universal figure, but one rule stands above all: start early. When education inflation sits at 8 to 12 per cent, fees can double in as little as five to nine years. A delay of five years can force families to invest more than twice each month to reach the same target. Time either helps you or works against you.
SIPs offer the easiest entry point. Set a reasonable amount, automate it, and increase it every year as income rises. Use bonuses and unexpected income to add more. Regular action beats grand plans.
Who Should Consider These Funds?
Parents, guardians, and even grandparents can invest, with the child as the beneficiary. These funds fit busy dual-income families and first-time investors who want a simple, structured solution.
A Practical Gift
The most lasting gift for a child is not a gadget or a holiday. It is preparedness: the ability to say ‘yes’ when an opportunity appears. A children’s fund is a quiet, disciplined way to build that preparedness. Start early, stay committed, and let thoughtful planning meet your child’s ambitions halfway.
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👉 Ranjit Jha (CEO)
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👉 Rurash Financials