Smriti, mother of 3 year-old toddler, Sania, is already worried about handling the huge expenses related to her daughter’s future. Coming from a middle-class background, Smriti has big dreams for Sania and is seeking investment options to start saving early for her daughter. Like Smriti, every responsible parent must be seeking investment options for child keeping in mind the rising expenses related to the children’s education and the ensuing expenses. Here we suggest some smart ways to help you get started on the path to securing your child’s dreams and aspirations.
If you start seeking investment options for child early enough, you do not need to make big investments. The best part about investing in a PPF while seeking investment options for child is that your investment can be as small as Rs 500 a year. Your lock-in period is 15 years, which leaves you with adequate corpus for your child at the end of the tenure. The maximum investment you can make while seeking investment options in a PPF is Rs 1.5 lakh per annum. Also, as an additional perk, the amount that you receive at the end of the tenure is tax free. Also, you can open the PPF account while seeking investment options for child in the name of the minor to make the withdrawal process easier.
Equity mutual funds can serve as a good investment option while seeking investment options,given that they have delivered an average return of roughly 16.5% annually in the past 10 years. Also, you can study the mutual fund market while seeking investment options for childand choose to invest in some stocks that have been performing well over the years. However, these investments are ideal if you have a larger risk appetite. If you do not want to venture into equity funds owing to the associated risks while seeking investment options for child, you can easily opt for an SIP for your child, which is low risk and is an ideal investment when you have adequate time in hand. If you make an investmentthrough a SIP in well-performing mutual funds while seeking investment options, you can gather nearly Rs 5.5 lakh over a 15-year tenure just by making a monthly investment of Rs 1,000.
Investing in a child plan is an ideal way to secure your child’s future by accumulating adequate corpus besides ensuring insurance as a safety net in case of the main breadwinner’s demise. You can make investments in traditional insurance policies or even choose Unit Linked Insurance Plans (ULIPs).
In the case of ULIPs, a portion of the premium amount goes into equity instruments and the rest into debt instruments. However, if you do not want to venture out too much while seeking investment options, you can stick to a traditional insurance policy, which will provide you adequate coverage for your minor child’s education, medical expenses, coverage in case ofdemise of either of the parents, and also act as a suitable collateral for loans taken for higher education.
If you are looking to make a safe and low-risk investment while seeking investment options, an RD is one of the best options. It can help you accumulate a significant sum over a period of 10-15 years, giving you returns at an interest rate of 9%. These features make an RD an ideal investment for long-term goals set for minors while seeking investment options for child.
Investing for Short-Term Goals
While most of the above mentioned options are for long-term investing, if you are looking to make short-term investments while seeking investment options, you can always choose from bond funds, short-term funds, fixed deposits and the likes. Also, you can invest in a 1-year RD when you want to match an immediate need of your child.
The key to reap the best returns on investment for minors is to invest early, which gives you adequate time to accumulate wealth. So take your pick from a host of options available in the market.