Marrying someone, becoming a parent, and then raising children. These are all major changes in the life of anyone. At the same time, these bring about mind positive changes, and most of us are naturally drawn to these changes.
Unfortunately, life is so much more complicated than what it appears to be. There are many who lost their parents due to death or have not been living with them due to separation. These parents now have to raise their children all by themselves, and this becomes emotionally and financially taxing for the parent.
The first step that a single parent must take is to overcome the trauma of the loss of their parent. The next and very crucial step is to figure out income and finances. After the loss of their partner, single parents might have very little or no income. And if their investments were handled by their partner, they would have little or no idea about investing. Furthermore, raising children, caring for their expenses and upbringing is another challenge.
This list of challenges and hurdles can go on and on. But there is some hope.
Take things one step at a time, and figure out how your expenses can match with your reduced income now. Accumulated savings will not last for a lifetime, and thus, even non-working parents will now have to look for a job.
Single parents need not stop planning for their retirement, or the marriage and goals of their children. All these are non-negotiable goals that require large amounts of funds. Thus, start planning well in advance.
SIPs in long term equity mutual funds is ideal to meet long term goals. Mutual funds are investor-friendly, considering their regulations and transparency. They also offer all products for different kinds of saving needs.
SIPs are very useful, especially for single parents. There are multiple reasons to back this up.
First of all, single parents can begin their SIPs with amounts as less as INR 500 per month. This would not also put a lot of strain on their resources.
Over time, this investment can be increased, so that in the long run, a sizeable corpus can be accumulated.
Secondly, SIPs in equity funds bring discipline to the investments of single parents. These investments are otherwise vulnerable to be derailed, considering the circumstances.
Thirdly, SIPs are simple products with limited sophistication. All that you need to do is pick up a good fund. Make sure that you consult a good financial planner, who will help you pick up a fund. And once this is done, stick to your investments till you achieve your goal. Also, review your portfolio from time to time to ensure that you are on the right path.
The volatility in equity is difficult to digest for many investors. SIPs average out the investment cost and can dampen market volatility. Also, appreciate that equity may be volatile in the short to medium term, but in the long term, its wealth-building potential is unparalleled. All that you need is a long-term horizon.
All in all, for single parents, SIPs can be a reliable and lifelong companion.