Last Updated on September 16, 2023 at 7:58 am
My son recently won Rs. 2500 in an olympiad contest. I asked him what he wanted to do, and he replied without hesitation, “Let’s invest it!” Many of you might think that the apple has not fallen far from the tree, but sadly that is not true.
I never won any prizes in school, and when I did earn Rs. 3000 as a fellowship (Rs. 500 a month, paid in arrears) in 1995 during M.Sc at IIT, M, I promptly got myself a coffee table book on cinema for the entire sum. Read more about how big a spendthrift I was here: The Financial Arrow of Time. So, I am happy my son has a frugal mindset, and my wife is entirely responsible.
So, where do we invest? The answer seems obvious. At that age, an equity index fund, as there is no asset allocation to worry about. So, which index fund? Nifty or the Sensex. I have nothing against the Nifty or UTI Nifty fund, but I like the Sensex (just an irrational thought). There is no difference between the two in terms of return or risk. Also see: Nifty vs. Sensex: Which should I choose for passive investing?
So, we choose HDFC Sensex Index Fund (direct plan, growth option). It has a reasonable tracking error and tracking difference record. Source: Our monthly index fund screeners. The fund is also part of our Handpicked List of Mutual Funds known as PlumbLine.
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Initially, I thought I would invest the Rs. 2500 and top it up at a future date. Then I realised this was a great opportunity to start a SIP. And so we did.
I started my first SIP for Rs. 1500 in Sundaram Tax Saver Fund Dividend Option (yes, that is how smart I was) when I was nearly 34 in June 2008. Also see Fourteen Years of Mutual Fund Investing: My Journey and Lessons Learned.
My son has a 20-year head start over me. Hopefully, he will cherish two things – the importance of unwavering discipline in investing (and all aspects of life) and the importance of risk awareness and reasonable expectation. Also, see Eight Investment Truths hours of number crunching have taught me.
I chose to invest in my HDFC mf portfolio (invested directly with the AMC) instead of opening a new folio for him. I strongly believe investing in the child’s name is unnecessary.
As regular readers may be aware, the book Chinchu Gets a Superpower, where a 10-year is taught the power of delayed gratification by researching more about what he (or she, there is a girl’s edition available) wants as a birthday gift, is inspired by my son.
Let us see where this journey takes us.
Finally, here are a couple of videos with my son when he was younger. He is now learning the math we discussed then.
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
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