Disciplined approach towards savings
Mr. Gandhi taught us all a valuable lesson through his disciplined approach to savings. A little amount set aside every month in a Child Plan helped him build a healthy corpus for his child's education. Mr. Reddy, on the other hand, had to pay the price for his lack of foresight. Had he invested in a Child Plan early on, his son's dream would have seen the light of day.
Relevance of starting early
Mr. Gandhi started keeping aside a certain sum of money in a Child Plan and these savings were left to accumulate. By the power of compounding, these savings multiplied and as a result, his son could realize his dream of studying abroad. In addition, it also provided Mr. Gandhi the flexibility to dip into his accumulated funds to pay for the piano lessons for his other son. Investing in a Child Plan for the long term certainly sets the power of compounding in motion.
Flexible options to enhance talent
Besides piano, Mr. Gandhi's younger on is keen on learning the guitar too. Like every parent, Mr. Gandhi is more than happy to nurture his child's potential. So he's planning to use some of the funds of his Child Plan, which have been growing over the years to help him pay for the guitar lessons.
Besides the habit of saving for the future, it is important to choose the right life insurance plan too. Mr. Gandhi chose a child Plan whose corpus grew over the years to benefit him, but also helped his sons get the best in life. Wouldn't Mr. Reddy have been as well-equipped had he chosen to invest in a long-term Child Plan? Of course he would. Something like a Unit Linked Child Plan offers the flexibility to put savings in the funds of your choice, ranging from pure debt to balanced to pure equity funds, all depending on your risk appetite.
Tackle consistent inflation in education
Even the inevitable rise in inflation that drives up education costs didn't worry Mr. Gandhi. He had a Child Plan that was busy compounding over the years to counter it. On the other hand, Mr. Reddy now feels the pinch of the cost of education because he didn't think ahead. Quite simply, his short term thinking left him financially stunted.