The first principle of investing for your children is to strengthen your own foundations.
You should be strong financially, emotionally and physically for your children to benefit in the future. Once your foundations are strong, you can think of starting to invest for your children.
Children’s growth and your career growth happen together. The steady growth of your career will take you to a position where you will easily be able to fund the many needs of your children, including the all-important education requirements.
Focus on improving your chances of going up the ladder to help your children. Professional degrees and re-skilling yourself to adapt to changing environment is a must for moving up the curve in your professional life.
It could also be the time when your debt is at its heaviest. You will have invested in a house by taking a mortgage. In times of expensive property prices, mortgage payments will hurt and with inflation as it is mortgage payments will hurt even more.
Your first priority will have to be to reduce your debt levels so that you can create more liquidity for yourself. Focus on debt repayment before thinking of investments for children.
Children will benefit from higher cover on yourself. The higher your medical and life cover, the better for them. Pay the premium you want to make for your children’s insurance and investment policies for increasing your own medical and life cover.
Children will benefit from your savings. You will be careful when saving for yourself as you have many needs for the money. You may not be as careful on your children’s investment thinking (wrongly) that it is long-term hold and forget. Build up your own savings before starting to make investment for your children.
Children’s health, both emotional and physical, depends on your health to a large extent. Manage stress effectively by staying physically fit and by keeping your finances in shape. Your children will do well when you are well in control of your own health and finances.
Start investing for your children once your own foundation is built.
Parthasarathy is the editor of www.investorsareidiots.com,a website for investors