Case study: Designing an investment app in 4 days
Challenge statement
Steve is a father of 2 kids, Sam (12 yrs old) and Samantha (16 yrs old). He wants to send them to the best college in the USA. He started using an app where he can save money to send his kids to college when they reach at the right age.
Problem to solve
You need to design the whole journey where Steve can set and track goals for his kids. While submitting the assignment please share -
- Your design process
- Different use cases
- Visual design direction you took
Duration & tools used
Duration: 4 days
Tools used: Adobe XD, & Adobe Photoshop, Adobe Illustrator
Research 🔎
What all you can invest in to give your child a stable financial future
It is important to keep at least a portion of your child’s investment portfolio flexible as goals may change as the child grows up. For instance, you really can’t tell which education stream the child will gravitate towards when s/he is still a preschooler. The same goes for supplementary education and miscellaneous expenses.
Investment Horizon
When it comes to education, you have a broad timeline to work with, given your child’s present age. This provides you with an investment horizon and broad milestones when you’d need the money. As with any investment, the longer the investment horizon, the more benefits of compounding you can reap.
Inflation
Every investment that you make for your child should preferably provide with inflation-beating returns, else it may end up being a losing proposition.
Now let’s look at the instruments and asset classes which can help you invest for your child’s future
Different modes of Investments
Equity investments
Equities as an asset class is a strong contender for making inflation-beating returns possible. Direct stocks, and mutual funds and exchange-traded funds (ETFs) investing in stocks are the options in this space.
However, before buying these instruments, it is important to note that your investment horizon should be over 5 years. This is not to say that equities can’t provide sizable returns in lower duration periods, just that longer durations make the asset class much more potent.
With a longer investment horizon, you can invest in aggressive equity funds, and as your investment milestone draws near, you can shift to balanced and hybrid mutual funds, and then to monthly investment plans (MIPs). In this manner, your equity exposure will shift from over 90% to 60% to 30% or less of the stocks portion of the portfolio.
Direct Equity
Here are some stock recommendations for the long term. As the investment horizon is longer when it comes to Child Investments, you might be okay investing in medium-risk equities.
Mutual Funds
The best way to save for your children’s future is to start an SIP in a long term fund. We have given you some recommendations here. If you want to calculate how much you want your corpus to be you can calculate it here using our SIP calculator
PPF and Fixed Deposits
When it comes to investing securely for our children, you can’t leave out Public Provident Fund (PPF) and fixed deposits from the conversation, especially for those with a long-term horizon. PPF matures in 15 years, earns attractive returns, and is tax exempt.
Fixed Deposits can offer inflation-beating returns when interest rates are high. In such a scenario, consider investing for seven years or above. Even if interest rates fall thereafter, the interest rate on your deposit is locked-in. Further, you don’t need to be restricted to bank or post-office fixed deposits, you can consider high quality corporate deposits as well which offer higher interest rates than bank deposits for the same duration.
Debt funds
PPF and FDs are not the only fixed income instruments that you have at your disposal. If you want to cash out of your equity holdings or if the investment horizon in drawing near, you can park you investment in short-term bond funds and income funds to play safe.
Summary
Overall, there is no one size fits all child plan that is best. See what works for you and start investing for your child’s future. The trick and the most important thing is to start early.
The earlier you start and decide your children’s investments, more you will feel secure with the planning. While it may seem distant but once it comes, you should be well prepared for the education/wedding/house expenses your child will need.
Solution:- Wireframe
* Some services provide the solutions to problems listed in product scalability. However, according to me, including all the services in one application is better than services on different applications.
Thank you so much for reading this case study. Suggestions are always welcomed.
