HDFC Children’s Gift Fund Empower and strengthen your child’s future, today. Don’t let �nances get in the way of your child’s dream! Please refer page 20 for product labelling An open ended fund for investment for children having a lock-in for at least 5 years or till the child attains age of majority (whichever is earlier) April, 2020
2 “Education is not preparation for life, education is life itself.” - John Dewey
3 Medical rounded off to the The above �gures are professional education in 2035 Monthly savings needed for 2035 2020 Rs. 53,890 Rs. 7,943 Rs. 23,412 2.69 Crore 64.4 Lakh 39.6 Lakh Higher education is not the privilege of the elite. Do you agree? 9.5 Lakh Engineering 116.9 Lakh 28 Lakh MBA promise on minimum returns and safeguard of capital. calculated based on a 15 Year SIP investment returning 12% p.a. The above investment simulation is for illustrative purposes only and should not be construed as a & MBBS program at Manipal University - Mangalore. 2035 �gures based on in�ation assumed at 10% p.a. Monthly investment needed to build such corpus by 2035 Graduate Programme in Management at Indian Institute of Management – Ahmedabad, B. Tech 4 year programme at IIT – Bombay (Fees extrapolated for 4 year course) Source: Indian Institute of Management – Ahmedabad, IIT – Bombay, Manipal University – Mangalore. Costs depicted based on the education costs for the Post How Much Will It Cost You Tomorrow? nearest hundred.
4 ¦ Cost of education much faster than in�ation Cost of Education is rising The above chart is only an illustrative example to show rising cost of education and not based on actual data. ever increasing costs Long term equity investing is a suitable medium to combat transportation, clothing, food, health care, etc. “The roots of education are bitter, but the fruit is sweet” - Aristotle Child care costs also include additional costs of housing, ¦ saving for education becomes even more imperative With rising education costs across all professional degrees, ¦ How Much is Enough? Inflation
5 The cost of education should not come as a surprise to dreams Finances should not get in the way of your child’s ¦ Save regularly with a goal in mind ¦ to choose from! So, prepare for the best , though you may have options ¦ you ¦ What If your Child Aspires To Go To Harvard? Are You Prepared? will take these numbers higher year after year Premium institutes have the pricing power and in�ation ¦ Similar courses abroad can cost signi�cantly more ¦ Rs. 28 lakh* The best professional degree courses in India cost up to ¦ Prepare For The Best * Fees for a 2 year (2020) program in IIM Ahmedabad. Source : IIM Ahmedabad
Source: Internal Calculation 6 Contributions ` 31,98,487 ` 18,01,513 ` 23,91,743 ` 26,08,257 ` 13,26,666 ` 36,73,334 Sachin Nicole Anirvan The Cost of Procrastination - Don’t delay the inevitable The later you start, the less your money works for you! The above is an illustration using assumed rate of return of 12% p.a. (monthly compounding) only to explain the concept of Power of Compounding. Sachin: Rs. 61,222/month for 5 years ¡ Nicole: Rs. 21,735/month for 10 years ¡ accumulate the same amount as Anirvan contribute a higher amount on a monthly basis to Nicole and Sachin are late starters and will have to ¦ Anirvan starts early and saves Rs. 10,008/month for 15 years ¦ The road to Rs. 50 Lakhs! It does not forecast or guarantee the returns in any mutual fund scheme. Earnings
Goal Based Investing Tend to overspend on other commitments Investing without a Goal ¦ Savings are kept in a “common savings pool” without any goal in mind ¦ Money gets withdrawn from the “common savings pool” for all �nancial requirements ¦ ¦ Goal based Investing towards Child’s Education What is left after spending gets saved ¦ What is left out of the “common savings pool” may not be adequate to tackle speci�c goals like children’s education ¦ Investors can get irrational in allocation of funds for various purposes and may resort Build a corpus meant for your Child’s Education! 7 ¦ Investors tend to rationalize their spending Targets a speci�c amount of corpus for your child’s education ¦ Money is earmarked for a speci�c purpose. For instance, investors do not touch PF corpus for buying a car (as the money is earmarked for retirement) ¦ on other personal / social requirements long-term holding of investments ¦ Investing with a goal brings discipline ¦ Balances your current aspirations vs future requirements. A sizeable corpus can be built over time ¦ Mental Accounting is involved, ensuring to premature withdrawals
¦ and important, a corpus meant for the same needs to Parents want their children to have a better life than theirs; Education is the Mental Accounting 8 nearing the goal Such investments are to be withdrawn only when ¦ be saved separately Since children`s education expenses are substantial “Mental Accounting” is an economic concept as per ¦ �nancial discipline Mental accounting leads to long term thinking and ¦ their consumption decisions and other behaviours into separate, non-transferable portions affecting which investors divide their current and future savings foundation for a better life.
9 - Above asset classes are not strictly comparable. Above chart is for illustrative purpose only. Past performance may or may not be sustained in the future. (% CAGR Returns) 4.0 8.0 12.0 16.0 Equity (S&P BSE SENSEX TRI) Gold Bank FD Source: Bloomberg, RBI Handbook of statistics on Indian Economy, MFI, World Gold Council. Avg Inflation # 2.0 6.0 10.0 14.0 14.6 8.8 8.2 #Average in�ation is shown for comparison with returns from various asset classes. Returns from March 31,1980 to March 31, 2020. Equities - A Powerful tool against In�ation When you have a lot of time to achieve your goals, ¦ Equities have delivered higher returns than other Asset Classes! ¦ Aren’t equities risky? Having a short term view or investing directly in equities without adequate knowledge can be risky. Volatility reduces with time in equity. Hence choose the right mutual fund scheme. ¦ Should I put all my money in equities? Not entirely. invest predominantly into equities. As you near your other major asset classes over the last 20 years. goals, you need to shift gradually to lesser volatile asset class like debt. ¦ How do I invest in equities? Lumpsum investments or Sytematic Investment Plan with a Mutual Fund. As your income increases, do a SIP Top Up. ¦ Have equities beaten in�ation? Equities have beaten in�ation and have compounded faster than 7.4
Professional Fund Management investment goals ¡ Liquidity ¡ Diversi�cation even with a small investment ¡ Other bene�ts Options to invest regularly in small doses or lump sum ¡ Meet �nancial goals by investing in products catering to a wide array of ¡ ¡ Long term �nancial goal planning How Mutual Funds help? 10 Conscious portfolio management to optimize returns ¡ In depth research ¡ Expert fund management Tax bene�ts
SIP after saving Ad hoc investments on special occasions like festivals ¦ Lump sum when you receive large �ows like a bonus ¦ Lump Sum Can there be a better gift to your child than investing very early on in their lives? SIP or Lump Sum? 11 This would inculcate discipline as to spending what is left ¦ ¦ As the income increases, do SIP Top Up ¦ Ideal way to develop a savings habit ¦ should be the savings For a salaried individual, the income is monthly and so ¦ Investments at a prede�ned monthly or quarterly frequency or your child’s birthday
¦ Have a target corpus in mind ¦ Start early and invest regularly toward the goal - Keep time on your side! ¦ Focus long-term and stay invested 12 Strategy to Smart Investing Children grow fast; Make sure your Savings do too! Presenting... HDFC Children’s Gift Fund An open ended fund for investment for children having a lock-in for at least 5 years or till the child attains age of majority (whichever is earlier) ^ ^with effect from May 23, 2018, the Scheme has undergone changes in fundamental attributes and other changes.
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