What (Knot) to Do.
We got to agree that Indian weddings are not a ceremony, but a phenomenon. The phrase “Big Fat Wedding” is used only with India, though there are six countries richer than us. While it is a fun experience to attend an Indian wedding, hosting one is an altogether different story. The desire of making it a memorable evening, and the pressure of meeting expectations of hundreds of people, is intimidating, unnerving and of course, expensive. Very expensive.
The beginning of every wedding investment planning
The beginning is – in most cases – started from the the birth of the child and goes on for up to two decades. The infamous Indian inflation makes it necessary to start saving early. Sadly, the amount required to marry a daughter is still more than that for marrying a son.
How much does a wedding cost?
The three major heads of a wedding involve
* The cost of feast (venue and food)
* The cost of (bride’s) jewellery,
* Money, clothing, or items given to family members
While there are several other costs that swell up the wedding bill, these three make up for the biggest part of the pie. Venue cost can fluctuate depending on the ‘austerity quotient’ of the day. Food – sold by the plate count – can vary from Rs. 500 to Rs. 2000 for a middle-class family. And the jewellery and other items are also highly volatile depending on the number of relatives, their expectations, and the spending capacity of the family. While it is almost impossible to give a generic figure to the cost of a wedding, it is important to gauge the expense under each of these heads and start planning backwards.
How to go about saving for a wedding?
From piggy banks and gold jewellery to bank accounts and properties, there is a wide range of investment and saving instruments that have been around for long. But as a wedding planner, how do you make a decision on which instrument to pick, and more importantly, which instrument to not pick. Some insights that will come handy in making decisions:
1) You can start small. But start yesterday.
The best investments aren’t big, they are just early. For wedding-based investments, do not wait for a specific age for your child to reach. Even if you can start Rs. 500 a month, it is best to start as soon as you can. The secret sauce of all investing is the power of compounding over time. Finish reading this article and – if you already haven’t – start your first investment right after.
2) Beat the market by periodic investing
Instead of investing 1 Lakh one time in a mutual fund, invest Rs.8500 every month. By doing this, you beat the market inflation in the longer term. Also, you can park your surplus in a dynamic RD without any lock-in, and earn some basic interest on it. Same trick applies to investing in stock market. Do not put all your eggs in one basket, or at one time.
3) Recalibrate your investments when necessary
If the annual performance of one Mututal Fund is steadily better than the other’s, you can consider parking more money in the former. Similarly, if the tax rate on FDs goes higher, it’s time to start channeling that money is say NSC or ELSS. Similarly, it has been noticed that gold and stock market are often inversely proportional. Lastly, keep into account taxation related policy changes, for both salaried and business professionals – when planning your short and long term investments.
4) Get updated, stay updated
A smart (and hence richer) investor considers investing like news. Reading the newspaper once a week or month isn’t going to keep you updated. Similarly, knowing one instrument at length, or one type of mutual fund can be futile, often fatal to your wedding-focused investment plans. If as a working professional you have limited time or interest in staying at the top of things – as is commonly seen – it is recommended to use a guided portfolio that is customized according to your goal and liquidity. The GPS or Guided Portfolio System by Edelweiss is a good option given its simplicity and security aspects.
Lastly, whether you have a male child or a female child, do not plan a fancy wedding at the cost of their education and personal growth. Along with their wedding, make sure you have scoped for their education requirements as well.