Secure your child's future with children's funds— here's all you need to know

Planning for your child's future is a crucial aspect of responsible parenting. Whether it's their education, marriage, or other important milestones, ensuring that you have the necessary financial resources in place is imperative. To assist parents in this endeavor, several investment options are available, including children's funds offered by various Asset Management Companies (AMCs) in India.

Speaking to CNBC-TV18, Salonee Sanghvi, Founder of My Wealth Guide, highlighted the significance of children's funds. Sanghvi described children's fund as a separate category specifically designed to address the financial needs of children's education or marriage. These funds are structured as open-ended mutual funds, but they typically have a longer lock-in period compared to normal mutual funds. This lock-in period ensures that the funds remain invested and accumulate returns, providing a stable and reliable financial base for your child's future.

When considering the allocation of assets within your investment portfolio, Sanghvi suggested evaluating two crucial factors. The first factor is your risk-taking ability. It is essential to determine the level of risk you are comfortable with, as taking too much risk can result in sleepless nights, while taking too little risk may hinder your ability to meet your desired goals. Understanding your risk appetite will help you make informed investment decisions, Sanghvi said.