• Saturday, March 02, 2024
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BusinessDay

Building wealth for your child

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Ladies are in the habit of confirming and reconfirming that they are pregnant. So, when your wife gives you an envelope or a white A4 paper, which is the pregnancy confirmation letter, be happy and clink glasses. Afterwards, you should know it is time to start planning the future of your unborn child.

You will agree with me that human beings, naturally, are in the habit of waiting until the need arises before they react; you don’t want to be one of such. If on your twentieth birthday, your father had given you a gift and it was a bank account revealing that you are a millionaire; you would have been better off. Imagine doing that for your child or children. I am not saying you should dump a million naira in each of your child’s account on his or her twentieth birthday. Except you are a Dangote, Mike Adenuga or an entrepreneur with undoubting hope of building a conglomerate in the future, you won’t be able to do that. So you probably need to a financial plan on how to protect the future of your child or children, making him a millionaire before his twentieth birthday. Here is what you should do:

Step One-Apply the deduction strategy: open a savings account for your unborn child in a local bank. I’m very sure your banker will be glad to help you with a flexible arrangement as long as you will be depositing your money with the bank. Then have a arrangement with your banker that at least 5% (or more if you have the gut) should be deducted from your monthly pay-check or income and automatically deposited in your unborn child’s account. If for example, you are earning 100, 000 Naira every month, 5% of your earning will be 5, 000 Naira. Parting with 5, 000 Naira every month, for a worthy course, will not break your back. After all, it is nothing compared to the amount some fellows part with, in a drinking competition with friends, in their usual bar or club on Fridays. This deduction strategy can be applied to any size of pay-check or income as long as you are willing and with a good understanding that all your problem cannot be solved with or without the deducted 5%. So why not choose a worthy course that will probably relieve you in the future and make you a proud father.

Step Two-Find an investment portfolio: based on my example, 5,000 Naira deducted from 100, 000 monthly income or salary in 12 months will equal 40, 000 Naira. By now, your child should be approximately 4 months old. This is perhaps the best time to find a secure investment that can help you grow your child’s money, away from your reach in a savings account. However, you don’t want to be named foolish because you abandoned money in a savings account; let it start working for your child. I believe if you ask your banker again, there are some juicy packages he or she can offer you on how to secure and grow your child’s money. There is child’s education fund, a replica of trust fund that can protect your child’s future. Also, these days, there are insurance policies that will accept a minimum of 2, 000 Naira every month and luckily you have more. You may want to consider such. There are also some financial houses offering typical stock broking account for as low as 5, 000. Fixed deposit is also not a bank idea; as well as T-Bill. Whatever you do, make sure you turn your child’s money into a financial vehicle that can at least bring back some percentage on investment at the end of every year for the next twenty years.

Step Three-Repeat the Strategy: there is every tendency that you will want to stop the automatic deduction of 5% from your income because you have turned over the first year savings into a growing investment. But remember the whole idea is for you to continue in this habit or strategy, every year, for the next 20 years. If you steadily maintain an income of 100, 000 naira, deducting 5% every month from it, in the next 20 years, you would have put aside 1.2 million Naira if you foolishly do not invest it. However, if you steadily grow your career, increase your income, keep deducting 5% and investing it wisely on behalf of your child, you will probably make your child a multimillionaire on his or her twentieth birthday. What better gift would your child deserve?

Step Four-Add to the list: now you don’t want only your first child to enjoy the privilege of being rich before his or her twentieth birthday. And I believe, like our fathers, you don’t want to give birth to 10 children in this harsh economy. But with a maximum number of 4 children from your loins, you can always give them the privilege of becoming financial free in the future. On 4 children, 20% deducted from your monthly income won’t make you poorer rather it will make you richer in the future. Follow this strategy diligent and your will be tagged the father of millionaires.