A Gift For Future

The missus was horrified on my suggestion, my mother thought that I am bringing western culture to India; my sister thought that I am bringing my office R&R Program to home. What did I think? Well, I just thought that the idea is absolutely wonderful, coming from the Oracle of Omaha.

Let me go into detail.

A Gift For Future - Financial Planning For Kids

You seen when our elder daughter was born she received money from different relatives on different occasions, 500 from a maasi, 1000 from an uncle, 100 from a distant cousin, 10000 from her naani and so on. All those crisp currency notes soon ended in a tidy sum. The cash received was over and above the various gifts like toys, clothes and chocolates that were consumed by me as she was too young to eat them.

Like any family we debated what to do with the money received and various ideas were floated, and most of them actually were one or other version of:

“Buy some Gold jewellery for her”

Now I am all for gold jewellery, but there were reasons I was opposed to the idea of buying gold jewellery for my new-born daughter:

  1. She was too young to wear  gold jewellery
  2. Once she grows old still she would take some time to understand how to take care of her and the gold when wearing such expensive items.
  3. She may absolutely hate jewellery bought a few years ago as we don’t know what the fashion 10-15 years down the line would be.

My logic was discarded as too clinical and everybody vetoed me till I came with a trump card. I made a simple offer to my mother and wife that for every rupee the Princess has received I will match with another rupee if they allow me to invest money in Mutual Funds. This kind of convinced them with only one condition that all the money will be in my wife’s name as none of them trusted the man who came with an idea of taking away his daughters money and instead of buying gold wants to buy Mutual Funds. (Disclaimer:  I do not work for a mutual fund company)

You see the idea is not unique or original from my side; I got this while reading the biography of Warren Buffet where he gifts Stocks in his favourite companies to his children and grand children. Now since I am not even 1/100th as good a stock picker as the Oracle of Omaha so I thought of buying reputed stock mutual funds.

I have been following the same with all the money that we receive for her from our relatives and any money that she saves from her pocket-money. A rupee received for her is matched by a rupee and the money is used to buy Stock Mutual Funds. Over the years those small little 100’s and 500’s matched by daddy dear are slowly but steadily growing and one day I am sure Princess will be happy to receive the money and buy jewellery of her choice rather than looking at something bought many years ago and saying “ Yuck!  I will never wear this. It is so old-fashioned”.

Now this is not a post about merits of gold as an investment versus stocks, but a simple personal thing that I thought makes more sense and endorsed by smartest investor of all time. Of course this should not be your only strategy to save for your kids, I am sure you will have a regular SIP, insurance and gold among other things in your portfolio. But if you are wondering what to do with all that money that your kids receive from relatives here is something we have been doing and feel good about it. It makes you add a little bit of extra to the money received and you know that money you will never touch as it is meant for the kid in future.

Would love to hear what do you do to save for the future of your kids.

Sasha and Prasad Np are proud parents of 2 girls whom they fondly call Princess (11 yrs in Feb 13) and Pinkette (4 yrs next month). He wears many hats after taking a break from being corner office critter for a long time. He is now entrepreneur, blogger, photographer, traveler and an investor in startups with unique concepts. He blogs at Desi Traveler, and can be reached at Facebook and Twitter.

  • Amrita Thavrani

    I usually save them together and when the sum becomes substantial enough, we either do a Fixed Deposit or buy things for which she needs at that point of time like stroller, tricycle etc.

    • Hi Amrita… Saving for kids is unique for every family. I guess anything is fine as long as you are doing something for the future.. thanks

  • A money for every money, invested well and then it multiplies into a saving… This one is a nice piece of advice…

    • Thanks Manjulika… now if only my money also doubled just like the kiddos 🙂

  • The money that my daughter usually goes to her current needs. We do not invest in gold for the same thinking as yours. She is too young for gold and we will buy her when she needs it. On a different note, I get very irritated when I hear comments like “Why! buy gold, you have to get her married one day or the other. You will need it then”!!

    • Hi Divya…Tell the gold bugs that all the gold ever dug out of holes in earth is still around and you can buy later too..

      Thanks

  • I totally agree with you on this one. When my son was born his great grand parents and grand parents bought gold chain and ring for him. I wondered if he would EVER wear them. And then again on his first birthday they bought gold. Whereas my husband and I made a firm choice of investing in mutual funds and FDs.

    • Hi Priyanka… I guess generation gap is something we have to understand and live with. Trust Oracle of Omaha in the long run stocks will outperform gold.

  • Thats got me thinking! I invest in units of ‘time’ with her. The money matters I guess. The gold glitters. The finances, well, I am not sure what will outperform the other, but what you are suggesting sounds like a swell plan!

    Thank you for sharing. Am going to do this. I mean, discuss this with the missus. 😉

    • Hi Kavi….. Time is priceless…. so can’t be compared with things that can be put a price on, challenge being ””’ Its a material world” hence the importance of planning financial security of the kids…

  • Buying gold for our son never crossed our mind! 😀 We have mutual fund investments for him.

    • I am sure he will thank you one day….gold would not have been of much use for him any ways… 🙂

  • It is a good idea to match the money collected and invest it for future. You don’t really feel the pinch.

  • You are right Ram…. Slow and steady wins the race….