Future Portfolio for a minor child
Printed From: The Equity Desk
Category: Personal Finance & Lifestyle-Strategies & problems
Forum Name: Personal Finance - Startegies
Forum Discription: Discuss startegies for tax planning, insurance coverage, Retirement planning, Home loans car purchases or any thing that affects personal finance.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2351
Printed Date: 04/May/2025 at 11:36pm
Topic: Future Portfolio for a minor child
Posted By: samirarora
Subject: Future Portfolio for a minor child
Date Posted: 30/Aug/2009 at 1:22pm
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Hi Guys,
Suppose one has one child, who is approx. lets say 5 years of age.
If it works for one child, it should work the same for another too, so, lets keep it to one child.
Lets say, one decides that he will buy stocks for the child worth 5 lakhs, a non-trading portfolio, to be held for the very long term... Lets say 20 years,when the child has now attained the age of 25 years.
Criterion for selection of stocks is
1. High Safety of capital
2. Possibly dividend paying, why not, as a bank account will have also developed by the end of 20 years.
3. Of course, capital appreciation of investment.
In today's market scenario, what would be the stocks one would buy, knowing he is going to hold for 20 years and yet not have to worry much about market turmoil or any short /medium term problems.
I hope to have a discussion of various stocks that might fit into this category and in due course, have a short list of say about 10-12 stocks, that fit into this category on which most sensible members would agree.
Best wishes,
Samir.
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Replies:
Posted By: basant
Date Posted: 30/Aug/2009 at 4:18pm
A child is always supposed to be a minor Look at Consumer and Banks!
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: jain208
Date Posted: 30/Aug/2009 at 4:33pm
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In my opinion it is very difficult to say for sure, which comapnies will exist in current shape after 20 years. In Udyan's manner of asking, if somebody puts a gun over my head and ask me one sector to bet on for 20 years, that will definitely be FMCG/consumer durables (stocks like ITC, Nestle, Glaxo) or maybe stocks which have a solid moat around them (like Crisil). But if I were to invest for my child for 20 years without bothering to look at my investments in the meantime, I will put my money in a combination of index MF, good diversified MFs and debt fund. If I don't want to give any time to my investments for the next 20 years, I won't invest directly in equity. Abhi. ------------- ======================================= The more it changes, the more it’s the same thing. |
Posted By: kulman
Date Posted: 30/Aug/2009 at 5:41pm
Perhaps also a http://www.theequitydesk.com/forum/forum_posts.asp?TID=400&KW=the+pharma+industry+whole&PID=116565#116565 - basket of Health Care stocks? ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Hitesh Shah
Date Posted: 30/Aug/2009 at 6:09pm
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Twenty years will pass quite quickly. Three from my side: SBI, BHEL, Nestlé. ------------- |
Posted By: Monkey
Date Posted: 30/Aug/2009 at 8:36pm
| My picks would be Nestle, Crisil, Glaxo pharma and HDFC twins. |
Posted By: vijaygawde
Date Posted: 30/Aug/2009 at 9:01pm
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If investment is going to be locked for 20 years, I would go for: HDFC, HDFC Bank, L&T ------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: deveshkayal
Date Posted: 30/Aug/2009 at 9:44pm
Index MF. I am sure Index will be there even after 20 years and hopefully the Mutual Fund  ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: prashantmohta
Date Posted: 30/Aug/2009 at 10:30pm
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Why not start teaching stock market at the age of 11
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Posted By: Monkey
Date Posted: 30/Aug/2009 at 10:40pm
How about Index ETF? In India, index funds have done poorly compared to their benchmark.
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Posted By: smartcat
Date Posted: 30/Aug/2009 at 11:54pm
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"Investing for your child's future" is a marketing gimmick mostly used by insurance companies.
Don't bother creating a separate portfolio for your child - especially if you don't intend to actively manage the portfolio.
Invest in equities like you normally do, and after 20 years, your child's future will be automatically secure.
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Posted By: kulman
Date Posted: 30/Aug/2009 at 7:28am
Yeah, good idea. However one should be careful.... keep the kids away from FnO. Another way is to teach him what not to do. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: tigershark
Date Posted: 30/Aug/2009 at 7:30am
------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: samirarora
Date Posted: 30/Aug/2009 at 8:51am
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Carrying on with one own's activity and then giving to the child is obviously going to happen anyway in the end, and also, i know that insurance companies have this invest for a child plan etc and there are various mutual funds one could invest in. I dont like mutual funds because i rather make my own mistakes rather than pay fund managers to make sometimes worse mistakes. Child plans by HDFC etc are already invested in... Bank Fds exist, so no point going into further debt funds.. as corpus of money is not that large.
My grandfather bought my mom , some odd shares long long ago, stuff like OCL, dalmia cement, ballarpur and some more... I cannot tell you the benefits my mom has had due to these shares and all my grandad did was invest into the IPOs at the time, at rs.10 per share etc.
Further, when i say, portfolio will be neglected for 20 years, i dont mean, that I will hide it somewhere.. I am always there to watch and possible re-adjust it if a desperate need should present it self, all i mean is, that its best to buy safer stocks of good companies in the first place, so one does not need to have to worry, and the child is happy when he/she is handed over the portfolio many years from now.
Investing like one always does is all very nice, but i find it a good strategy to divert funds every now and then, into child's account, slowly but surely, so that by the time child is grown up, you dont have to worry and the child is rich on their own... and this also holds meaning, because if all funds are in your accounts, you can continue using it for your self, buying stocks, taking risks, probabaly buy an audi or something.
I see slow and systematic addition to childrens accounts over the years as a very prudent thing, and i am convinced, that a child's portfolio should be started earlier.. even if its very small... for example, i was thinking of dividing NIFTY 50 stocks into rs.5 Lakhs and buying rs.10000.00 worth of each to start with.
Problem with above is, that dividend cheques of small amounts would be a pain.
best wishes,
samir. ------------- |
Posted By: smartcat
Date Posted: 30/Aug/2009 at 11:40am
But apparently, even a 30 year old is a "child" in the eyes of his/her parents.
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Posted By: kulman
Date Posted: 30/Aug/2009 at 11:47am
TrueWhile on the subject, the http://www.theequitydesk.com/forum/forum_posts.asp?TID=808&KW=also+from+grown+ups+who+behave&PID=99835#99835 - oracle once said : Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 30/Aug/2009 at 11:54am
Yeah, true. Some cats are real supercats. Watch http://www.youtube.com/watch?v=nZPnY9DzNLM - this video here . ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: 9StockPortfolio
Date Posted: 31/Aug/2009 at 1:30pm
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I would invest in the child itself. give him good value, moral education. I give him good academic education. let him differentiate between good things & bad things. Let him learn the importance of earning money. I remember my grand father saying that quality education & support to your children till 18 yrs is their birth right. We should at least give that. Let them start their own journey.. we will be there in case any help is required. So i would suggest hat do not invest that money for your child. invest it as is it's your another chunk of money, whenever your child wants to start a business or want higher studies, Invest it in him. ------------- Pursuit of Value |
Posted By: kulman
Date Posted: 31/Aug/2009 at 1:43pm
Wow! One of the best posts on TED. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: samirarora
Date Posted: 31/Aug/2009 at 1:47pm
The question of what stocks to buy for a child until he/she is 20+ of age is not a moral or ethical one, but completely unbiased view of specific stocks.
Hence, only stock specific replies would be of any help within the scope of this thread.
Best wishes,
samir. ------------- |
Posted By: kulman
Date Posted: 31/Aug/2009 at 1:53pm
Ooops. So i'm disqualified here. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: samirarora
Date Posted: 31/Aug/2009 at 2:01pm
 Not at all, you are not disqualified....its just that i am very seriously considering doing what i asked here, and wanted to take some help from TED before I took the plunge...i thought it would be a good idea to take the help of the collective wisdom and also, the thread might be of some help to some others hence while all posts are welcome (not that i am anyone to welcome or unwelcome any post) but also some query related posts also would be nice
Apologies if i came across any other way.
best wishes,
samir. ------------- |
Posted By: hit2710
Date Posted: 31/Aug/2009 at 2:15pm
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The following would be my picks for such long duration
ITC GILLETTE BLUE STAR HITACHI CHENNAI PETRO FEDERAL BANK MAX INDIA IDFC CIPLA TITAN All the above stocks based on current prices. If permitted, I would like to add some sort of SIP in Reliance, Infosys, HDFC, HDFC Bank. Companies we select should be around when the child turns adult and should not do vanishing act. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: samirarora
Date Posted: 31/Aug/2009 at 2:16pm
yes.. it is imperative that the companies are around after say 20 years.. thats for sure!!! ------------- |
Posted By: prashantmohta
Date Posted: 31/Aug/2009 at 7:58pm
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hindustan lever will also be there.......................
its not only existence that matter,it should be about compounding that matters.
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Posted By: indian
Date Posted: 31/Aug/2009 at 9:33pm
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equal amounts in:
dish tv
yes bank
blue star
icici bank
tata steel
l & t
navneet publications
sbi
if half of them disappear after 20 yrs u will stil create wealth
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Posted By: omshivaya
Date Posted: 31/Aug/2009 at 11:58pm
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If I were you, I would put equal amounts in 5 top diversified equity mutual funds.
As far as stocks are concerned I can only think of some names(I am biased though to these and also have limited knowledge) Yes Bank HDFC Bank L&T ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: 9StockPortfolio
Date Posted: 31/Aug/2009 at 10:11am
No body knows what would be the future after 20yrs. The existing companies which are around for last 20 yrs could be hindsight. and you know past performance may not be an indicator of future.. I would not suggest any stock investment for child's future. Rather I would go for real estate piece. May be small land or shop would do wonders.. ------------- Pursuit of Value |
Posted By: smartcat
Date Posted: 31/Aug/2009 at 10:56am
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My Top 10 stocks for Bunty -
FMCG:
Marico
Pidilite
Dabur
Godrej Consumer
Asian Paints
Banks:
Yes Bank
Kotak Mahindra Bank
Bank of India
HDFC Bank
Software:
eClerx [This one will decide whether Bunty does his MBA from Stanford University or a local university]
Basically, put most of the money in mid cap FMCG and mid cap banks - because FMCG and banks have higher chances of lasting for 20 years. Avoid pharma companies. If you have to put money in pharma, pick only those which earn 100% of its revenues from India, and have no intention of exporting their products.
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Posted By: nannu_68
Date Posted: 01/Sep/2009 at 8:36pm
 No Nestle??
------------- nannu |
Posted By: smartcat
Date Posted: 01/Sep/2009 at 9:37pm
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I had made up my mind to pick 10!
Nestle is a good one actually.
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Posted By: bharti
Date Posted: 01/Sep/2009 at 9:55pm
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At today's prices, I would chose :
Retail - Titan
Finance/Bank - HDFC Bank, HDFC , SBI
Air Conditioning - Blue Star, Voltas
City Gas - Indraprastha Gas
Others - Reliance, SBI, Tata Steel
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Posted By: Fardeen
Date Posted: 10/Feb/2010 at 10:01pm
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My suggestion would be:
Reliance
Axis Bank (Not sure why no one added it though it is a consistent performer)
HDFC Bank
BHEL ------------- Success in not final and failure is not fatal, it is the courage to continue that counts. |
Posted By: stocksavy1
Date Posted: 27/May/2010 at 12:09pm
BHEL is a definate, even now:
Momentum in execution progress maintained: Revenues for the quarter rose 29% to Rs 1355 bn mainly driven by the power sector. BHEL had won sizeable order flows in FY08 and FY09, which is now translating into revenues |
Posted By: angel05
Date Posted: 27/May/2010 at 3:33pm
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Banks - HDFC Bank
FMCG - Nestle Retail - Pantaloon Engineering - BHEL Capital Goods - Punj LLoyd ------------- "The greatest mistake you can make in life is to be continually fearing you will make one." |
Posted By: bijoy_ajj
Date Posted: 27/May/2010 at 11:17pm
Punj Lloyd??........
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Posted By: asterix24
Date Posted: 05/Jul/2010 at 6:06pm
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I wonder what did the author finally land up doing? I am also facing the same situation currently, and would definitely be interested in knowing the final resolution. From my individual perspective, I am investing in a few Large-cap Diversified funds as it provides the breadth and diversification. From a specific stock perspective, I am looking at specific sectors and looking a few companies in those sectors. I am currently looking at IT (Wipro is my current pick) and Pharma (Biocon). I presume one would keep track of the investment and re-adjust on a periodic basis (probably once in a year) |
Posted By: basant
Date Posted: 05/Jul/2010 at 7:41pm
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For long term investment focus exclusively on the RoE of the companies you intend to buy. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: asterix24
Date Posted: 05/Jul/2010 at 8:00pm
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Hello Basantji, Thanks for the very valuable advice. I was focusing only on PE (EPS), Company Profile and previous EPS growth patterns to base my decisions. After your post, I went and checked the RoE for Biocon and Wipro based on Mar10 figures and found them to be Rs. 63 and Rs. 143 respectively. Can you please guide me on how to interpret these numbers and base my further decisions? |
Posted By: basant
Date Posted: 05/Jul/2010 at 8:06pm
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It is some hard work but try reading through this: forum_posts.asp?TID=119 - RoE and RoCE - The important tools. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: asterix24
Date Posted: 05/Jul/2010 at 8:33pm
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Thank you, Basantji. I had got confused on how to calculate RoE, but finally managed to get the right figures through your post and some further reading on web. |
Posted By: snehaldani
Date Posted: 05/Jul/2010 at 9:52pm
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Came across this interesting thread today only.
I would share my personal experience which may be of use to members around here.
About 22 years back, for my son of less than 2, I had acquired 50 Reliance F debentures at around Rs.100 each which eventually got converted into 50 Reliance shares. The number of shares have now become 200 due to 2 bonuses of 1:1. ADAG shares have been acquired free courtesy the holding.
I am more than satisfied lot today. I would believe that even now one can possibly bat on the business acumen of Mukesh to continue to give superlative, inflation adujsted real returns over a long period of time.
Of course, there are many other names that also come to mind. May be, L & T, Kotak Bank, SBI etc. ------------- Snehal P.Dani |
Posted By: pkumar
Date Posted: 06/Jul/2010 at 2:22pm
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I am expecting a baby early next year and will like to go for following with SIP route(buying when others are selling) The list includes market leaders and defensive bets
SBI
HDFC BHEL TATA Power TCS Castrol Nestle NIIT Navneet Pidilite Sintex Apollo Hospital Reliance
Feedback will benignly solicited
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Posted By: TCSer
Date Posted: 12/Jan/2011 at 10:29pm
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ICICI BANK & TCS & ALL TATA GROUP COMAPNISES SPECIALLY IN NON CYCLICAL LIKE TITAN,CMC,TCS,TATA POWER
------------- Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays |
Posted By: ash7979
Date Posted: 12/Jan/2011 at 12:45pm
If its is for Very LT say 20 years & margin of safety is prime concerned then I will not go away from Top 100 stocks...I will choose 4-5 stocks from Top 100 stocks & stick to them Until they stay inside Top 100 Club, if anybody go out from top 100 Club then that stock also will go out from my LT portfolio & another stock from Top 100 will come in (depends on Sector).. My Top 5 Picks from Top 100 would be:
I think Jindals are going to be next Ambanis so, I bet on JSW energy or may be we can go for Jindal steel & Power, but I will keep at least one company from Jindals.. You know your 5 lacs can become 500 lacs or 5 Cr in 20 years...with a CAGR return.......ONLY 25.89... I can think above 5 stocks can achieve this for you. I am also seriously thinking to put 1 lacs each in above mentioned stocks for 20 years for my son (he is around 2 years old Now) but waiting for right time or Right prices (Timing the Market...OLD habits die hard  ------------- Fear can hold you prisoner. Hope can set you free.... |
Posted By: tejas.k
Date Posted: 15/Mar/2011 at 12:24pm
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Hi guys, My father in law has given some money to me for investing for my daughter. (1.5 yrs old).. He wants me to invest in so called children plans. ( which are nothing but ULIPS and hate them). I have convinced him but still he wants child tag in the product name :-). Fortunately theirs a mutual fund HDFC Children gift investment plan. This a equity oriented hybrid fund and has clearly outperformed all peers. (the nearest 2 are from hdfc. hdc prudence and hdfc balance. Last year 18% and last 3 year 15.5% CAGR. (May be because TTK prestige that it holds? ) I liked this fund. But if take a conservative 12% CAGR, the corpus doesn't look that great. (I am looking at 10-15 years). Dont call me greedy but that amount may not mean much 10/15 years down the line. So i was wondering if should consider some stock instead? (Just one. I don't want to split it into n stocks). If one were to consider one stock, what would that be?? Nestle, ITC, Titan are the ones that come to my mind. It would be great if you could share your views. |
Posted By: somu0915
Date Posted: 15/Mar/2011 at 12:45pm
| Castrol |
Posted By: itpro
Date Posted: 15/Mar/2011 at 11:27am
| Godrej Industries... Recommended by RD. Also good analysis by Barlaji. |
Posted By: barla
Date Posted: 16/Mar/2011 at 12:04pm
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I personaly feel putting into a mutual fund would be best. Maybe even the index fund of Benchmark.
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Posted By: tejas.k
Date Posted: 17/Mar/2011 at 10:19pm
| thanks all. |
Posted By: patra04
Date Posted: 25/Jul/2011 at 10:09pm
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Tejasji,
May I ask, what you did eventually? Its OK if you dont want to divulge the details.
Regards,
Rahul ------------- An investment in knowledge pays the best interest. |
Posted By: tejas.k
Date Posted: 26/Jul/2011 at 8:59pm
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Rahulji, No problems at all. However, in the end I didn't do anything. :- ) I have put that money in my savings account from which I am spending or investing in markets). I believe, one doesn't need any separate investment for your child. You can as well treat your primary investment for all your future needs. In this case, I actually wanted to invest that separately so that I am can update my father in law on the returns and that might make him happy. (he has given the same amount to his other son in law who has put it in some so called children plan which is a ULIP. I wanted to beat my brother in law. :-) not literally but in terms of returns. hence posted the query )
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Posted By: patra04
Date Posted: 26/Jul/2011 at 1:10am
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Thank you for the response Tejasji.
I have been thinking about doing something similar for my son (18 months old).
I kind of agree with you when you say, 'we can treat the primary investment for all future needs'.
I dont want to go the ULIP/Index/MF way as I feel we have to shell out unnecessary costs with these instruments which can cause a significant difference with returns in the long term.
Regards,
Rahul ------------- An investment in knowledge pays the best interest. |
Posted By: itpro
Date Posted: 27/Jul/2011 at 12:05pm
1. Invest in term plan.
2. Invest in mediclaim.
3. Invest in Mutual fund and Shares [ You decide the percentage based on the time you can spend and saftey you want ].
4. ULIP/Index are no...no.
e.g. It is better to leave it to professional fund manager for some percentage of target fund. For rest of the kicking... equity is there.
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Posted By: patra04
Date Posted: 27/Jul/2011 at 7:57pm
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Agree with you itpro. Infact I currently have a similar mix (some % in stocks and remaining in MFs). Going forward I would like to see myself 100% in equities. When that happens, remains to be seen. Regards,
Rahul ------------- An investment in knowledge pays the best interest. |
Posted By: tejas.k
Date Posted: 27/Jul/2011 at 10:23pm
well said. I would also add Fixed deposit to it. (Though you cant call it an investment).
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Posted By: jagbir
Date Posted: 27/Jul/2011 at 10:27pm
I'd recommend to add "Accidental / Disability Insurance Plan" as well in the list. This is very cheap but important insurance policy. In an unfortunate event like accident which results in some permanent/temporary disability, source of income may suffer/lost for long time. The term insurance would not help and mediclaim will be insufficient (as it only cover medical expenses up to certain limits). |
Posted By: bandlab1
Date Posted: 28/Jul/2012 at 10:00pm
| it would be interesting what the author finally did. this is an interesting thought and i would say will be fruitful in the long run. sometimes it works to buy and forget instead of tweaking every year. just buy and forget and open the locker after 20 years. you can open demat account on the kid and he can only sell after becoing major. |
Posted By: surjeetk21
Date Posted: 03/Sep/2012 at 10:06pm
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this was question in my mind as to where should i invest money for my child to get a minimum 15 % return yoy and i realised that index investing is best. sensex gave a return of approx 17% yoy since inception. so if we have horizon of 20 yrs for requirement of money for kids i feel it is best to invest there.though i also feel that we must diversify our investment in debt and others investment options as well. this was just a thought i am yet to act on it.
views invited. |
Posted By: Dragonbhat
Date Posted: 03/Sep/2012 at 8:38am
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Hi Surjeet,
In case you are investing money for your child, please Do Not put all the money in an index fund. Past performance is not an indicator of future performance. For the index to give 15% yoy in 20 years index will have to reach Sensex 200000+. In the last 17 years index was able to give that kind of returns because it started with a low base. Individual stock might give you 15% yoy but Sensex is highly unlikely to do so. Based on my 12 years of investing experience, somethings are good to read in books but these are good only to understand the concept of investing. They do not have practical application. If it is possible, don't invest more than 33% of the money in one single asset or avenue. Regards, Dragon. P.S: Sorry if the post is too long or any of my calculations are wrong. ------------- Hindsight is 20/20. |
Posted By: bandlab1
Date Posted: 07/Nov/2012 at 10:36pm
| you need to keep checking the performance atleast once a year |