Every parent in India likes to save
and invest for their kids' secure future. Most parents start saving for their
child right from the day he or she is born. A good initiate by parents, the
earlier one starts planning lighter will be the financial load once the plan
gets laid out over the years.
But due to the ever increasing
complexities with loads of investment products available in the markets
investors often tend to stay confused and might also choose a wrong child
investment plan which might not even meet the child’s future goals. In India
it’s a herd mentality that child planning has to be approached with debt funds
such as PPF, fixed deposit and traditional insurance policies which tend to
give low yields. Due to the low yields there is a possibility that investor
might financially lag behind into their goal because of the poor choice of
child investment plan. However, such is not the case. With market filled with
good aggressive and equity funds options, a proper planning and research will
help you extract high returns in the long term phase of your child plan.
Therefore, choosing the right child investment plan that will not only fulfill
his or her present needs but will also secure their future goals of higher
studies, extracurricular activities, career choices etc. is the most crucial
part of any investment.
The article discusses about some
important parameters to be considered for designing the best child investment
plan.
Building a strategy
A target is more likely to be
achieved if there is a strategy devised for it. Therefore, when it comes to
saving and investing for children you should never overlook this important
aspect. The ideal way to start is think the time horizon for child investment
plan. A child planning is more kind of future focused decision which would be
after finishing school, their higher studies, extracurricular activities,
hobbies, choice & preferences, job or business and finally the commencement
of new married life. So you need to take a slightly longer time frame in mind
for planning which could be anywhere around 15-20 years. This means it is a
long term investment which gives the advantage of taking more risks for gaining
high returns.
Once you figure out the time frame,
shortlist the expenses that you have to save for like child education, hobbies,
or marriage. It is advisable sit and understand your child’s dream, their
hobbies, likes and dislikes and then probably start estimating the expense on
desired higher education and wedding expenses by adjusting today's costs for
inflation. Once you have a direction on time horizon and quantum of amount
required you can launch hunt for the best investment option for child's future
needs.
Today, the biggest concern of
parents is gaining high returns. So here are some points considered for best
results of your child investment plan.
Returns
A long term child investment plans
should ideally give good returns well above inflation as you have sufficient
time to experiment in hand. So, even if there might be fluctuations, when you
average the returns the capital would have been protected.
Tax
Long Term investments build-in a
good corpus which tends to be bulky enough for higher liabilities. So you need
to choose investment options that minimize tax liability or best eliminate it.
Discipline
A child investment plan is a serious
effort to build secure future for your child. A financial part of your child's
education and marriage are goals which are long term and needs disciplined investment.
It is advisable the investment plan should at best be automatic, so there is no
worry of missing payments because of issues like forgotten, out of station,
lack of time or stuck up with some other work etc.
Charges Applicable
Lastly it’s important to curb the
charges of your child investment plan. Since the investment would be recurring
in nature you would have to bear the recurring costs on child plans. If the
charges are high they would eat up most of your returns so it’s better to
monitor the administrative charges, process charges, fund managing & switching
charges, mortality charges while drafting your child plan.
Expert Opinion
It takes good effort to make smart
financial decisions for securing the future of children. Educate yourself well
on various child
investment plans through online research, visiting the financial firms and
talking to agents. And if you are not very confident about investment decisions
you wish to make, consult a financial expert. Prevention is better than cure.
Hi,I am Ritika Shah working with insurance comapny as insurance adviser owing good knowledge of various policies such as,child insurance plans, saving for child, best child plan,best child insurance plan, child investment,Child Edauction Plans plans,Best Child Insurance Planchild plans
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