Being parents, we naturally wish to give our children a great head-start in life. With this mission in mind, we often ensure proper higher education and other future milestones to help them build their foundation. However, the cost of almost everything is rising each day, particularly in education. Thus, you should check for investment plans for child to fulfil your objectives. However, going for a more reliable option is always the best way. Here are some tips that will help.
Public Provident Fund (PPF)
PPF is arguably the safest investment these days. The interest rates are decent and, most importantly, stable, while the duration is 15 years. While the scheme matures in 15 years, partial withdrawals are allowed from the 7th year, and loans can be taken against the balance from the 3rd year, providing some flexibility. The interest you earn is free from taxes, and there are deductions on offer for your contribution every year. This is an excellent choice if you’re looking at building medium-long-term savings. Start the account in your child’s name and keep investing regularly as part of investment plans for child.
Sukanya Samriddhi Yojana (SSY)
The SSY is tailored for girls and is an excellent savings scheme with Government backing. The interest rates are pretty attractive, and families may open accounts for their girls until they reach ten. They can keep investing for 15 years from the date of opening the account. Partial withdrawals (up to 50%) are allowed after the girl child turns 18 for educational purposes, and the funds will fully mature when your daughter turns 21. SSY is a highly recommended option among investment plans for child, especially for those with daughters.
Child Education Plans
Many insurance companies offer special children’s education plans which give lump sum payouts when your child reaches specific points in life, such as going to university. Some plans also offer a mix of lump sum and periodic payments, along with waiver-of-premium benefits in case of the parent’s untimely death. Compared with other investment plans for child, a child education fund helps you feel secure about your child’s educational future. Plus, it is a disciplined, planned way to save money for specific goals.
Systematic Investment Plan (SIP)
Mutual funds, through a Systematic Investment Plan (SIP), are a great way to build wealth over time. SIPs let you invest small amounts regularly, helping your money multiply over the long haul. Equity mutual funds have the potential to yield high returns, but they also come with market risks. When ten or even 15 years out projections are considered, SIPs can be an ideal part of investment plans for child to meet long-term goals like higher education expenditures.
Unit Linked Insurance Plans (ULIPs)
ULIPs offer insurance and investment plans combined in one package. A part of your payment pays for your life cover, and the rest goes into investment. While not all ULIPs are specifically for education purposes, you can opt for child-focused plans. Therefore, ULIPs can be an attractive choice among investment plans for child, providing both safety and growth.
Conclusion
When we talk about our children’s future, an investment plan for child should be in place. It should be sufficient to generate good returns while ensuring a financial cushion to help you cover almost all your child’s needs. The earlier you start goal-setting and saving, the better it is for your child. Choose a mix of growth-based and secure investment plans for child per your risk tolerance levels, and keep tracking your portfolio regularly.
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Image published on November 18, 2016
