According to reports from Mint, parents can build a ₹1 crore corpus for their child by age 18 through strategic early investments, averaging ₹8,000–₹10,000 monthly via SIPs from birth. The strategy leverages the power of compounding over nearly two decades, significantly reducing the monthly investment burden compared to starting later. For parents who begin investing at age 5, the required monthly SIP increases to ₹15,000–₹18,000, while starting at age 10 may require investments exceeding ₹35,000 per month to reach the same goal. As The Economic Times reports, experts emphasize that consistent, increasing SIPs, not just flat ones, are crucial for true wealth creation, urging investors to focus on real returns and disciplined investing through market cycles.
As reported by Mint, the investment formula follows the compounding principle: A = P(1+nr)n, where A represents the final corpus, P is the investment amount, r is the annual return, and t is the investment duration. Assuming an average annual return of 12% through equity mutual funds, parents would need to invest approximately ₹8,000–₹10,000 per month via SIP from birth to accumulate close to ₹1 crore by age 18. The power of compounding becomes particularly evident over long durations, with early starting significantly reducing the required monthly contribution. The Economic Times notes that building a ₹5 crore retirement corpus on a ₹50,000 salary is achievable with disciplined investing, where investing 30% of your salary monthly via SIP may take 31 years, but a 7% annual step-up can cut it to 25–26 years.
According to Mint's analysis, the recommended asset allocation includes 70-80% allocation to diversified equity mutual funds or index funds during early years, with 10-20% in debt instruments such as PPF, Sukanya Samriddhi Yojana for girls, or short-duration debt funds for stability. The strategy also includes a small allocation to gold ETFs or sovereign gold bonds as diversification. The Economic Times advises first-time investors to begin with balanced funds and short-duration debt, gradually increasing equity exposure and rebalancing portfolios periodically. Parents can gradually reduce equity exposure during the final 3-5 years before the child turns 18 to protect the corpus from market volatility.
As reported by Mint, experts suggest a mix of flexi-cap funds, index funds tracking Nifty 50 or Sensex, and mid-cap funds for long-term growth potential. The strategy includes an increasing SIPs annually through a 'step-up SIP' strategy, such as starting with ₹6,000 monthly SIPs and increasing them by 10% every year. This approach helps parents reach the ₹1 crore target more comfortably without requiring very high initial contributions. The Economic Times reports that mutual fund investors are exploring international and thematic schemes, with some delivering up to 200% returns, while technology and semiconductor funds, especially those with Taiwan exposure, have seen significant gains. Experts suggest starting global diversification with broader US funds.
According to Mint's analysis, inflation is another critical factor that parents must consider. A ₹1 crore corpus today may not hold the same value after 18 years, especially for goals like higher education abroad. Parents targeting premium education expenses may need to aim for ₹1.5–₹2 crore instead. The Economic Times notes that with a ₹1.5 crore retirement corpus earning 6%, withdrawing ₹1 lakh monthly can last about 22 years, leaving little balance. Experts caution that returns from the corpus aren't guaranteed and suggest a safer 3–5% withdrawal rate to sustain funds longer. Beyond investments, parents should ensure adequate health insurance for the family, term insurance cover for earning members, and emergency funds separate from the child's investment corpus.
