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In the field of financial education, the importance of teaching children basic money management skills from an early age cannot be overstated. As leaders in the financial sector, executives understand that active financial education plays a vital role in shaping future generations. One notable strategy in this effort is the opening of investment accounts for children, a means to instill financial responsibility and develop long-term financial acumen.
If you want to crunch some numbers, here are the total assets under management for the Indian mutual fund industry: INR5,454,214 billion. Retail investors hold over 8.2 billion SIP accounts and regularly invest in various mutual fund schemes in India offered by asset management companies (February 29, 2024). Also read: Answers to your questions: What are the benefits of investment plans for children?
More than 120 million investors have registered in the last five years since 2019, according to NSE. In January 2024 he added over 5.4 million investor accounts. According to BSE, the number of registered investors was 161 million as of February 9, 2024.These figures give us an approximate idea of the size of the market we are dealing with.
The shift to stocks, particularly through investment trusts, has accelerated since last year. INR10 trillion more in just 12 months compared to the beginning INR10 trillion that took 50 years. It is clear that there is a change in mindset among Indian households, leading to a shift in money from savings accounts, fixed deposits and gold to stocks and mutual funds.
According to primeinfobase.com, in September 2023, the proportion of domestic individual investors, including private investors, self-investment companies, NRIs, and HUFs, among NSE-listed companies reached a record high of 7.62%. The equivalent figure for the United States is 25%, which clearly indicates future trends.Also read: 7 benefits of joint savings accounts offered by SBI, HDFC, ICICI and other banks
The decision to open an investment account for your children and start investing with them can serve as a positive step toward developing an understanding of financial principles and practices. Through this collaborative approach, parents can embark on a financial education journey with their children and experience first-hand the value of investment strategies, risk assessment, and financial planning.
When opening an account for your child or investing as a family, it’s important to use a secure online platform. By involving children in the decision-making process, parents not only foster a sense of ownership, but also instill valuable lessons in financial management.
These co-investment accounts provide a structured platform for parents to allocate funds toward their children’s future dreams, such as higher education, entrepreneurial endeavors, or other long-term goals. This intentional resource allocation helps children develop a positive mindset towards financial planning and goal setting.
Additionally, ongoing dialogue about financial goals and investment strategies fosters open communication within the family and fosters a collaborative environment that is conducive to shared financial decision-making.Also read: Tax implications, benefits of gifting stocks to children
Additionally, establishing a joint investment account serves as a catalyst for intergenerational wealth transfer and estate planning. By introducing investing concepts to their children at an early age, parents lay the foundation for passing on financial literacy and responsibility across generations.
Through this intentional approach to financial education, parents not only prepare for their children’s financial futures, but also instill in their children the tools and knowledge they need to navigate complex financial environments with confidence and competence. I can.
In conclusion, opening a joint investment account with children represents a strategic initiative in the field of financial education. By involving their children in the investment process and providing them with hands-on experience in financial decision-making, parents can help them develop important money management skills that will serve them well into adulthood.
Financial sector leaders are active advocates of financial education, championing the adoption of strategies such as pooled investment accounts to develop a financially savvy generation focused on long-term success.
Mr. Sidaberayutham M., Founder and CEO of Alice Blue
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