When it comes to planning the future of the apple of your eyes it is not an easy task. Most of the times parents think that they are well-planned in regards to the future of the child, however, when the time comes they realize that the funds are not sufficient.
Therefore, when planning it becomes important to select the right child investment plan. Today, there are many child investment plan options available in the market. On the premise of the requirements, choose the best child investment plan, which suits you the most.
Listed below are some of the options that should be considered by parents and secure the financial future of the child:
To start with the public provident fund comes up with this amazing tax feature that is EEE, which stands for exempt, exempt, exempt. Within this, the initial tax deductions are permitted for the investment. Moreover, upon the returns, which are earned via accumulation, no tax is imposed. The complete amount is withdrawn towards the end also remains tax-free. It also comes with a term of fifteen years; this will help to accomplish long-term objectives for the child such as the marriage or even the education of the child. The funds are essentially deposited for the fixed time frame that helps to earn interest upon savings.
When it comes to achieving goals such as child’s education and so forth then investment through systematic investment plan in the equity funds is one option that should be looked at for a long-term. The long-term is generally somewhere between seven years to fifteen years or even more. The minimum sum of investment in the systematic investment plan is Rs 500. When you are investing via systematic investment plan, then the returns from the equity mutual funds will more likely beat the rate of inflation each year along with compounding power. Therefore, to attain the significant goals for your bundle of joy investing in the equity mutual funds via the SIP is an ideal child investment plan option.
We all live in the world of uncertainties where anything can happen at any point in time. Today, you are there to take care of the needs of the child. Have you wondered what if you pass away untimely? How will the child cope up specifically financially? Well, the answer to such a question is to have a term insurance cover that covers the child. Having this child investment plan is beneficial as this cover ensures that the future of the child will not be affected in terms of finances. When opting for the term insurance cover, make sure that you choose a coverage that includes the maximum expenses related to the child such as livelihood, education and marriage.
The key highlight of the Sukanya Samriddhi Yojana is to encourage the habit of savings for the girl child. Any girl child up to ten years of age can avail this scheme wherein an account can be opened. The minimum sum that can be invested is Rs 1,000 and the maximum can go up to Rs 1.5 lakh respectively yearly for fifteen years. Within Section 80C this scheme also comes up with the tax feature that is EEE. The rate of interest within the scheme is subject to change. The maturity term for Suaknya Smariddhi Yojana is twenty-one years. Moreover, the partial withdrawals could be made when the child turns 18 years. This sort of child investment plan is ideal for a girl child that will help her to meet future objectives.
These are non-connected plans intended to satisfy the educational necessities of the child. They additionally offer death and liquidity benefit by giving different payouts during the approach tenor. You have the decision of taking the survival benefit (far beyond the approach sum) on or after its due date, however during the policy term. The term of the money-backed plan is generally 15 years, while the premium paying term keeps going ten to eleven years. The entirety that one can choose within this plan begins from Rs.1 lakh. A few plans likewise give refunds on the off chance that you pick a sum higher than Rs.1 lakh. These plans typically give ordinary payouts. The initial payout is of fifteen per cent, in the fourth year of the plan. The second and third payouts are of fifteen per cent each, given in the eighth and twelfth year. The maturity benefit that is fifty-five per cent of the assured sum, is given on expiry of the plan. Aside from your child, you will likewise get bonuses when the plan matures. According to the common tax standards, the advantages got under this policy are tax-exempt.
When compared to the equity mutual funds then debt funds have a low risk. Besides, the funds are essentially invested into different bonds or deposits that will help to earn interests by the lender funds and then earning interest that is the source primarily of the returns. Investing in debt funds are a great child investment plan option for the recurring expenses of a child such as fees of the school, which comes with liquidity. It delivers up to five to seven per cent returns yearly and investing in the short-term debts are flexible and permits investment or withdrawal at any point in time.
The Unit Linked insurance plans are a component of different mutual funds, at times debt or equity and sometimes a blend of the both. Today, different ULIPs in the market would help to secure the future of the child. The unique selling proposition of a child’s ULIP is that provides triple points of benefits. It is the highest form of insurance coverage, equity market participation and investments in a disciplined manner. When the amount is paid to the beneficiary, the prospective premium will be waived off at the maturity value that ensures that dreams of the child will be met. The ULIPs have surrendered charges in the starting years simply so that the investors do not withdraw the policy early and sense of discipline is inculcated.
The Bottom Line
The age of the child plays a significant role and helps you to start investing in the child investment plan. You might think at the initial years of the growth of the child, that you would buy the plan later, however, we often neglect the fact it is better to start early as you have the benefit of investing less.
Likewise, it gives you more window to save, ability to take the risk and lastly, that advantage of compounding. These advantages decrease as the child grows older. Growth is important in investment as it will you to meet the rising education expenses without any burden or stress. The thought is simple, the longer you delay investing in the child investment plan, it will be tougher to meet the goals of the child.
It is also important that you track the chosen child investment plan as the situation is never the same and is time changing. Choose the best child investment plan only when you are satisfied with it and have assessed your risk appetite.