₹50 lakhs, 1 crore, 5 crore, or more, you can’t target any random amount to fund your child’s marriage. It all depends on how much you can afford, again, your affordability depends on how much you can invest in a regular interval. On the other hand, an estimation on how much money is required on what level of marriage is also a big question.
There are various factors upon which your child’s marriage budget depends, which is almost all related to your personal lives and personal financial decisions. Let's understand the step wise process for calculation.
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Current estimated wedding expense
According to your affordability, requirement, and reasonableness of the expenses, calculate the total of current wedding expenses you are planning to. You can include expenses like catering services, guest house rent, decorations, jewellery, gifts, etc.
Number of children
If you have only 1 child, you only have to focus on the marriage of that one child. If you have 2 children, then you have to save the same amount or almost the same amount of money for 2 children, which will become 2x on yourself. You need to keep all your children in mind.
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Future value of current expense
As per the previous history of inflation rates in India, come up with a figure (%) to calculate the future value of your current estimated budget of your wedding. You can use various online calculator to reach the value or you can manually use the formula-
FV = PV (1+R)^N
FV = Future Value
PV = Present Value
R = Rate of return on the investment
N = Duration or time-frame of the investment
A well formulated and diversified portfolio would be the best to accomplish the financial goal you want to achieve. You can choose SIP or systematic investment plan according to your risk-appetite. The calculation part begins with the amount you have already had for your child’s wedding. Suppose, by using above mentioned steps, you have reached an amount of ₹25 lakh and you have already saved for your child’s marriage ₹5 lakh.
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Now, your child is 7 years old and you are planning your child’s wedding at the age of 23. Technically, you have 16 years to save ₹20 lakh. If you are planning to invest in a monthly SIP, you need to invest (approximately) ₹10,500.
You can also get to reach your targeted amount earlier than expected when the market is giving a bullish trend to the investors. A well diversified portfolio and regular review of your portfolio will help you in accomplishing your task earlier.
It is necessary to have a full fledged financial plan in the terms of an accurate estimated amount and required rate of returns, based on which you can further rebalance your portfolio on a regular basis. Ideally, you should review the performance of your investment every 6 months.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com