Financial experts emphasize the critical importance of starting mutual fund investments early for long-term financial security. According to ETMutualFunds, Shivam Pathak, CFP and Founder of Asset Elixir recommends that fathers ideally begin planning in their late 20s or early 30s. Pathak explains that money needs time to grow, stating that a SIP started at 30 will grow much bigger by 60 than one started at 40, simply because it had more years to compound. Manish Kothari, Co-Founder & CEO of ZFunds reinforces this concept, noting there's no magic age for starting investments, with the earlier beginning allowing compounding to do more heavy lifting than monthly contributions.
The financial impact of early investment is demonstrated through concrete examples. As reported by ETMutualFunds, to build ₹5 crore by age 60 at an assumed return of around 11%, someone starting at 30 needs to invest about ₹18,000 a month, while someone starting at 40 would need nearly ₹58,000 a month for the same goal. Kothari explains that mutual funds serve as a strong vehicle across all stages, offering SIPs for accumulation, STPs for gradual deployment, and SWPs for planned income once independence is achieved.
Experts advocate for different investment approaches for legacy wealth compared to retirement planning. According to ETMutualFunds, Kothari recommends a higher equity allocation for generational wealth, focusing on long-term growth while ensuring wealth remains intact for future generations. He notes that the retirement corpus and wealth intended for passing on are different goals with different horizons, and should not carry the same risk profile. Pathak suggests a diversified approach for long-term goals, recommending a simple mix of large-cap funds for stable core holdings and flexi-cap funds for all-rounder investments across large, mid, and small companies.
Financial experts identify several common mistakes that fathers make while planning retirement. As reported by ETMutualFunds, Pathak warns against delaying retirement planning while focusing entirely on children's needs and keeping too much money in safe options like fixed deposits, which often fail to beat inflation. Kothari highlights three critical errors: funding children's education or weddings at the expense of retirement, treating insurance as an afterthought with inadequate term and health cover, and not seeking professional guidance. He emphasizes that there are loans and scholarships for children's goals but no loans for retirement.
Experts believe fathers can play a crucial role in teaching children essential financial concepts. According to ETMutualFunds, Kothari emphasizes that the most valuable lessons are about behavior and discipline, noting that the greatest wealth a father can pass on is not just money but the wisdom to manage and grow it. He recommends involving children early by asking them to classify purchases as needs, wants, or future goals, and helping them choose goals, estimate costs, and decide monthly savings requirements. Pathak suggests teaching children to start early with small amounts and stay consistent rather than waiting for large lump sums, while also helping them develop wise spending habits through budget management.
