Celebrate your Child's wedding in style!
The iconic Big Fat Indian Wedding is obviously an expensive affair but that should be the least of your worries. Through this guide and interactive calculator, just plan ahead and create an unforgettable experience for your family!
A step by step guide to plan for your Childs's Wedding!
Step 1. Estimate the likely expenses
What sort of a wedding would you like to have for your child? Will it be a simple wedding with a few close friends and relatives? Will it be a grand destination wedding? Or will it be a palace wedding in Udaipur?
Deciding on your child’s dream wedding can help you estimate its cost. While there is no end to how much one can spend on the Big Fat Indian Wedding, estimating the cost early on will ensure that your family will have a wonderful ,once in a lifetime experience! The cost of a wedding typically ranges from Rs. 25 Lakhs for the “simple wedding” to as much as Rs.3 crores for a palace wedding.
Step 2. How much have you saved currently towards this goal?
Step 2 is to put together a list of all the investments you have already made towards this goal.
(a) Current Value of Debt Investments: These investments could be in Bank Deposits, PPF, Insurance products, Debt Mutual Funds or any other debt instrument. (b) Current Value of Equity Investments: Some of you might have been saving through Systematic Investment Plans (SIPs) in equity mutual funds or have invested in equities or equity mutual funds.
This gives you an idea of your current savings toward this goal and based on your return assumptions can estimate how much these investments will be worth when your child goes to college . If you are lucky you may have a surplus, or else you may have a shortfall that needs to be bridged using an appropriate savings plan.
Step 3. Determine your asset allocation
You have already determined how much you need (Step 1) and how much you already have (Step 2) to meet the expenses related to your child’s education. The savings gap has to be filled by saving and investing appropriately. You now need to reflect on how much risk you can tolerate and decide the appropriate mix of assets (asset allocation).
Since investment returns are unpredictable, it is important to make some assumptions on the likely returns in the future. We would encourage you to use conservative estimates while budgeting for future returns. Basis the asset allocation and the estimated returns, you can arrive at a potential return that you will use to develop a savings plan. As you can see, a higher allocation to equity means a higher potential return but also a greater level of risk. Most investment plans fail due to a higher level of skew towards debt or equity. Getting the right balance is key.
However, since your child’s wedding could be 10 or 20 years away, you can go for a much higher allocation to equities as this will enable you to generate a higher return, and save lesser to reach your goal.
Step 4. Set up your savings plan to meet the gaps, If any
Very few investors are blessed with sufficient funds to meet their child’s college education costs. If you are one of those lucky ones, you just need to review and readjust your portfolio periodically.
Conversely, if you have a savings gap, you need to create a plan with the right blend of products to help you bridge this gap and eventually meet your target savings amount.
Next Steps
I hope this step by step plan and the calculator helped you gain clarity on how to celebrate your child’s wedding in style!
At Ortium, we are committed to help individuals meet their Financial Goals and would be delighted to put together a savings plan for you that ensures that your child has a dream wedding! Please feel free to write to us to schedule a discussion.
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