As a parent, the best thing you can do for your children is to provide them a good education so that they can have a secure future. Providing a good higher education to your child can be harder especially in India, with the skyrocketing cost of education. It can be a herculean task to meet the high tuition fees of children or repay student loan debt.
Thus, it is very important for parents to start planning finances for their child right from the time the child is born. Moreover, the parents should teach their kids the importance of money management and financial planning so that they can be financially independent with time. To create a strong financial backup for the child, the parents should invest in the right child investment plan where gain the benefit of long-term investment returns and can save for the future. Let’s take a look at the investment options to provide a secure future for the child.
Equity Mutual Fund
Equity mutual funds are an ideal option of investment for investors whose retirement is at least 15-20 years away and who have a young child. Investing in equity securities for the long-term allows the investors to cover the risk associated with the market and to deal with the volatility of the stock market. As compared to other investment options, equity mutual funds offer higher investment returns and help to accumulate wealth in the long-term. The young parent can create an equity portfolio specifically for their child’s education. This can be done by opening an account for the minor or through the process of a systematic investment plan.
Investing in ULIP Plans
For parents, providing your child with the financial needs is not sufficient it is also important to protect your child against any type of emergencies. Every parent should secure their child’s future with the right protection plan so that their kids can continue to live a good life even in the absence of the parent. A ULIP plan fulfills both these aspects, as it offers the benefit of investment plus insurance protection. The child ULIP plan offers a triple brownie point to the policyholder. These ULIP plans not only provide higher insurance coverage and regular investment return but also comes with premium waiver benefit. Under this option, the future premium of the policy is waived off in case of the demise of the insured person during the policy tenure. Moreover, along with the benefit of investment returns, the plan also helps in tax saving U/S 80C and 10(10D) of the IT Act. All these combined benefits offered by ULIP makes it a lucrative option for the child investment plan.
Sukanya Samriddhi Yojana
This is a deposit scheme, which was introduced by the government of India under the campaign of ‘Beti Bachao, Beti Padhao’. The scheme is specifically designed to secure the financial future of the girl child. The parent of the girl child can open the scheme anytime after the birth of the girl child up to 10 years of age. The subscriber can open the account at any post-office or commercial banks. An individual can start contributing to the account with a minimum amount of Rs.1000 and can invest up to a maximum of Rs. 1.5 lakh in a financial year. If you have a girl child then this is the best child investment plan to invest in. The scheme comes with a tenure of 21 years or till the date the girl child decides to get married i.e 18 years. As compared to other investment options, the current interest rate offered by Sukanya Samriddhi Yojana us 7.6% per annum.
Child Insurance Plan
Having a child insurance plan is a must for every parent who wants to secure the financial future of their child. A child insurance plan provides adequate coverage to the child in case of the unfortunate demise of the insured person during the policy tenure. Moreover, the Best child insurance plan plan also takes care of the future needs of children like higher education, marriage, etc. Child insurance plans come with an inbuilt premium waiver benefit, wherein the entire premium of the policy is waived off in the event of the demise of the insured person during the policy term and the benefits of the policy remain the same throughout the policy tenure. A child insurance plan offers various benefits under the same umbrella. Thus, every parent must consider investing in a child insurance plan to ensure a financially secure future for their children.
The Bottom Point!
As a parent, you can consider investing in these investment options to provide a secure future for your child. However, before making an informed choice make sure that you analyze your risk appetite, growing inflation rate, earning capacity, and other important aspects. Moreover, to create a strong financial future for your loved ones it is always advised to start investing at an early age.