I recently went out. That itself is a rare phenomenon, but this time it was rarer than rare because I went to check out a new, fancy café. I don't usually eat out a lot, but I had heard a lot of rave reviews about this new place, especially their fresh fruit offerings. So I packed my wife and kid into the car and off we went, they being as big fans of fresh fruits as me. The café had a simple, cozy ambiance. A few chairs and table, and light music in the background. It was my kind of a place.
We asked for their fresh fruit menu and it seemed quite impressive at first glance. They had a wide variety of options to choose from and after much deliberation, I decided to go for the Merry Berry Snowfall. I thought I couldn't go wrong with a name like that, but I was wrong. Merry Berry Snowfall turned out to be nothing but a few small pieces of strawberries and even fewer pieces of blueberries strewn around a dollop of vanilla ice cream. I felt cheated, and rightfully so. I could have easily made that at home, in a more cost-effective manner and without having to dress up for it.
On a somewhat similar vein, on the investment front, a children's plan can also be easily replicated in a cost-effective manner using simple mutual funds. There are a lot of AMCs and insurance companies that are offering children-special plans that are touted to be ideal investments for your child's future. I'm sure a lot of parents and grandparents have been advised to put their money in such plans. But they are not really necessary.
Most of these children-special plans are complicated and often come with a unjustifiable lock-in period. These investments are supposed to be long-term investments, but you can easily do it by yourself. Just start an SIP in a well-performing multi cap fund, stay disciplined with it, don't touch the money for other purposes and review the fund's performance every year or so. There, that's a children-special plan replicated for you.
Look of a children-special plan the way I looked at the Merry Berry Snowfall, with trepidation. We don't need to pay more for something fancy, especially when we can easily make the same thing by ourselves. Be it a sundae or a children-special plan, all you need is just a few of the basic ingredients and you're good to go.
This article was originally published on March 21, 2015.
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