Financial Planning when your child is 18 – 25 years old

If you had planned carefully and stuck to your plan diligently, you should be able to accumulate a sufficient corpus to meet your children’s education needs. Now is the time to fund your children’s college or higher education expense, from your accumulated assets. Since you need to fund your children’s college and higher education over several years, you should use systematic withdrawal plan (SWP) to fund your children’s educational expense. With SWP you can withdraw a fixed sum very month to meet your children’s tuition fees and other expenses, while the balance assets continue to earn returns. You should be mindful of the holding period for the new long term capital gains tax regime. In the last Union Budget, the holding period of debt funds and MIP for long term capital gains is 36 months. Long term capital gains for debt funds are taxed at 20% with indexation benefit. For your children’s marriage you should continue to invest in Gold ETFs. For other wedding expenses continue to invest in balanced funds and switch to debt funds when your child’s wedding is near. Before your child’s wedding, you can redeem your ETFs and other investments to buy gold for the wedding and fund other marriage related expenses.