Single parents have unique challenges. SIPs can take care of the financial ones
19-Aug-2020 •Research Desk
Marriage, becoming a parent, raising children - all of these bring to mind positive images. That's why most of us are naturally drawn to them. However, life is more complicated than it appears. There are many among us who have lost their partners due to death or separation. They now have the sole responsibility of raising their children. This could be difficult, both emotionally and financially.
Overcoming the trauma of the loss of the partner is the first step that single parents must take. The next challenge is related to the income and finances. After the loss of their partner, single parents may now have less or no income. They may have little idea about investing if investments were handled by their partner. Further, they have to raise children and provide for their upbringing and expenses. These challenges may seem to be insurmountable. But there is hope. Take one step at a time. See how you can match your expenses with your reduced income or savings. Because living on accumulated savings alone may not be possible for long, non-working single parents can look for a job.
Single parents shouldn't stop planning for their retirement and their children's education and marriage. These are non-negotiable goals that require substantial amounts. Hence, one should begin planning for them well in advance. For long-term goals, SIPs in long-term equity mutual funds are ideal. Mutual funds are investor friendly, given their transparency and regulation. They offer products for all kinds of saving needs.
SIPs are especially useful for single parents. There are many reasons for this. First, single parents can begin with amounts as small as Rs 500 per month. This won't put much strain on their resources. Of course, they must increase it over time so that they can accumulate a sizeable corpus later. Second, SIPs in equity funds can bring discipline to single parents' investments, which are vulnerable to be derailed otherwise, given their circumstances. Third, SIPs are a very simple product that requires limited sophistication. All one needs to do is pick a good fund. For that, one can consult an expert who can help in long-term financial planning. After you have picked a fund, stick to your investments till the goal is achieved. You can periodically review your portfolio to ensure that you are on the right path.
Many find it difficult to digest the volatility in equity. Because SIPs help you average your investment cost, they can dampen market volatility. It's also worthwhile to appreciate that while equity can be volatile in the short to medium term, its wealth-building potential is unparalleled. All one needs is a long-term horizon.
For single parents, SIPs can prove to be a lifelong, reliable companion.