As a parent, you wish to provide your children with the best of everything in life, even when you are not around. When it comes to planning for your child’s future, an early start can make all the difference. Starting the saving process earlier gives you a longer time period to fulfill the financial goals you are aiming to meet, such as your child’s education, marriage, or supporting them in the initial stages of their career. It’s important to plan the investments which you think will help you to meet your financial goals. We have listed a few investment options which can help you build a secure financial future for your child. These are:
1. Life insurance:A life insurance cover is an important component of your financial plan because you can name your child as a beneficiary. You can set your child up for a solid financial future and provide for his/her monetary needs in case of a parent’s untimely demise. This amount can be used to take care of immediate expenses like loan repayments or other debts. Most importantly, it will cover a big part of your child’s expenses until he/ she comes of age and is capable of earning.
2. Investment in property:Buying a house for your kid can be a really good investment. By doing so, you not only help them save their income by eliminating the need for paying rent or buying a new house, but you also secure their future housing. Plus, your kids can sell the property in future at an appreciated value to earn profits. If you do not have enough funds to buy a house, you have the option to take a home loan for the same. There are several banks and NBFCs that offer loans at attractive interest rates and better terms. But before availing a housing loan, make sure to calculate your EMI and check your affordability so that your kids are not burdened with debt.
3. Child savings account: Child savings account can be opened for kids below the age of 18 years. Such accounts are also called ‘minor accounts’. For accounts of minors below the age of 10 years, the guardian must operate the account. However, minors over 10 years of age can operate the account on their own. Parents/ guardians can set limits on the withdrawal amount. Once, the minor attains the age of 18 years, the account has to be designated as a regular savings account. An application form along with KYC of minor turned major needs to be furnished.
4. Fixed deposits: Fixed deposit is a financial instrument that pays a fixed interest rate until a given maturity date. FDs offer a higher rate of interest than a regular savings account and also have many other advantages which make them a preferable option for investment. Currently, banks are offering returns up to 8% on fixed deposits as per tenure. Make sure you don’t break the FD in between because it may affect your returns due to premature withdrawals.
5. SIPs:SIPs (Systematic Investment Plans) are a popular investment option, especially for those who are not very savvy with investing or are short on time, or money. A SIP can be started with a minimum investment of as low as Rs.500. Mutual funds exchanges are done on a large scale, which allows investors to reap benefits that are greater compared to the investment costs.
When planning to invest, it is advisable to consult an expert who can guide you regarding the plans which are most suitable for your child’s needs. Details such as plan maturity dates, premium due dates, or investment amounts must be kept in mind before opting for any plan.
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