top of page
  • Writer's pictureTeam Stellar

Gift Your Daughter a Lifetime Memorable Wedding Day: The Complete Financial Plan



As a parent, one of the biggest dreams you have for your child is to see them happily married and settled in life. And in India, one of the biggest milestones in a person's life is their wedding day.

However, as we all know, weddings can be quite expensive affairs, and it's not always easy to save up enough money to cover all the costs. That's why it's important to start planning and saving for your child's wedding as early as possible. In this blog post, we'll explore the different options available for parents who want to save for their daughter's wedding, and compare how much they can save by investing in different investing options. We'll also discuss the benefits of being disciplined with your savings, and how starting early can make a big difference in the long run. So, if you're a parent who wants to give your daughter the wedding of her dreams without breaking the bank, keep reading to learn more!


Part 1: Understanding the Costs of a Wedding in India

Before we dive into the different savings options, let's first take a look at the costs of a typical wedding in India. According to a survey conducted by WeddingWire India, the average cost of a wedding in India is around ₹10 lakhs to ₹1 crore, depending on factors like location, number of guests, and the type of wedding. Let's consider a middle class family in a small town in India.

Here's a typical breakdown of the costs involved in a wedding in today's cost:

  1. Gold Jewellery (assuming 15 Thulas gold): 9,00,000

  2. Clothes : 1,00,000

  3. Photography and Videography: 1,00,000

  4. Decorations and Flowers: 50,000

  5. Wedding Hall: 1,00,000

  6. Food & Catering: 2,00,000

  7. Music & Band: 50,000

  8. Miscellaneous expenses: 1,00,000

Total Cost Today: 16,00,000

Now assuming that you just blessed with a new born daughter. Typical marriage age for the the daughter is 21-25 years. Let's take 25 years for the sake of calculation. Now let's project the cost 25 years from now.

Gold prices typically rise around 8% CAGR in the long term. Let's assume all other costs increase by 6% year over year. So, for the sake for calculation, Lets consider the average inflation of 7%. With these assumptions, the cost of the same typical middle class family wedding in a small town would be approximately 87,00,000 in the next 25 years.

As you can see, weddings can be quite expensive, and it's important to start planning and saving early to ensure that you have enough money to cover all the costs.


Part 2: Savings Options for Your Daughter's Wedding


Now that we have an understanding of the costs involved in a wedding, let's take a look at the different savings options available for parents who want to save for their daughter's wedding.

Option 1: Fixed Deposits

Fixed deposits are a popular savings option in India, and they offer a fixed rate of interest for a fixed period of time. While fixed deposits are a safe investment option, they may not offer the highest returns in the long run. Typically, banks offer 7% to 8%. The long term average could be even less. Bust, let's consider it as 7%. Now, to get 87 lakhs in 25 years with 7% rate, you need to deposit 16 lakhs today which is quite high. essentially you are getting zero returns since your inflation is also 7%.


Option 2: Recurring Deposits

Recurring deposits are similar to fixed deposits, except that you make regular monthly deposits instead of a lump sum. While recurring deposits can help you save regularly, they may not offer the highest returns in the long run. For example, if you invest ₹1000 per month in a recurring deposit for 25 years at an interest rate of 7%, you will receive a maturity value of 7,87,000 only. To receive 87 lakhs, you will need to invest 11,000 every month.


Option 3: Public Provident Fund (PPF)


The Public Provident Fund (PPF) is a government-backed savings scheme that offers tax-free returns. While the interest rate may vary from year to year, PPF is a safe investment option with a long-term horizon. PPF is a 15 year product and it can be extended for any number of years with 5 years each time. PPF rate of interest is coming down with each passing year. current PPF rate is 7.1% and assume the same rate For example, if you invest ₹1000 per month in a PPF account for 25 years at an interest rate of 7.1%, you will receive a maturity value of approximately 8 lakhs which is higher than what you would have saved with a fixed or recurring deposit. to get the entire cost of marriage (87 lakhs), you need to invest 18,800 per month.


Option 4: Sukanya Samriddhi Yojana (SSY)


The Sukanya Samriddhi Yojana (SSY) is one of the flagship scheme launched by the central governamet in 2015 as a part of the "Beti Bachao, Beti Padhao" campaign. It aims to promote the welfare of the girl child and encourage parents to save for their daughter's education and marriage expenses. Any parent with a girl child below can open the account with a minimum deposit of Rs 250 and a maximum deposit of 1.5 lakhs in a financial year. The scheme has a tenure of 15 years contribution and maturity of 21 years.

Contributions made to the SSY scheme are eligible for tax deductions under Section 80C of the Income Tax Act. Additionally, the interest earned and the maturity amount are also tax-free.Overall, the SSY scheme is a great way to save for a girl child's future education and marriage expenses, while also enjoying tax benefits and a high rate of interest. Current interest rate is 8%.

with monthly contribution of 1000 for 15 years, and maturity at 21 years would be 5.4 lakhs. if we invest it in the similar 8% instrument for another 4 years, the maturity value would be 7.33 lakhs. So, for the sake of argument, SSY can give 7.3 lakhs with 1000 per month in 25 years. To get 87 lakhs by your daughter wedding, you need to invest 9500 per month in SSY which is less compared to both RD and PPF.


Option 5: Mutual Fund Systematic Investment Plan (SIP)


A mutual fund SIP (Systematic Investment Plan) is a disciplined way to invest in mutual funds. With a mutual fund SIP, you invest a fixed amount of money at regular intervals (usually monthly). Mutual funds are professionally managed, and they invest in a diversified portfolio of stocks, bonds, and other securities, which makes them a good long-term investment option. For example, if you invest ₹1000 per month in a mutual fund SIP for 25 years at an average annual return of 12%, you will receive a total of approximately ₹17 lakhs which is much more higher than the all the options above.

In fact, to fund the entire marriage (87 lakhs), you just need to invest 5510 per month which is half of what you need to invest in all above options. This is assuming a conservative return of 12%. Schemes like HDFC Children's Gift fund returned 26% in the last 3 years and 16% CAGR in the last 23 year. That means, this scheme turned 3 lakh investment at the launch into 91 lakh today.

HDFC Chilrens Gift Fund returns
HDFC Chilrens Gift Fund

Summary of all investments options

Summary of all investment options
Summary of all investment options

Part 3: Benefits of Being Disciplined with Your Savings

No matter which savings option you choose, the key to success is being disciplined with your savings. Here are some benefits of being disciplined with your savings:

  1. You can achieve your financial goals: By being disciplined with your savings, you can ensure that you have enough money to achieve your financial goals, such as your daughter's wedding.

  2. You can avoid debt: By saving up for your daughter's wedding, you can avoid taking on debt, which can save you money in the long run.

  3. You can build wealth: By investing in long-term savings options, such as mutual fund SIPs, you can build wealth over time, which can help you achieve your other financial goals, such as retirement.

Part 4: Starting Early Makes a Big Difference

Finally, it's important to start saving for your daughter's wedding as early as possible. The earlier you start, the more time your savings have to grow. For example, if you start investing ₹5000 per month in a mutual fund SIP when your daughter is born, and continue for 25 years, at an average annual return of 12%, you will have saved a total of ₹85 lakhs. On the other hand, if you start investing the same amount when your daughter is 10 years old, you will have saved only ₹23.42 lakhs

Conclusion:

In conclusion, saving for your daughter's wedding is an important financial goal for parents in India. By understanding the costs involved, and exploring the different savings options available, you can make a plan that works best for you. Whether you choose a fixed deposit, recurring deposit, SSY, PPF, or mutual fund SIP, the key to success is being disciplined with your savings, and starting early. By following these principles, you can give your daughter the wedding of her dreams without breaking the bank.


コメント


stellar logo 1500x300.jpeg
bottom of page