Christmas is the festival of presents. Perishable items aside, every smart parent who sees the bigger picture for the future of his child knows that the gift of long-term financial security beats all others when it comes to their kids.
As soon as a child is born, the prospects of his/her better future and security gain top priority in the parent/s’ life. You only want the best for your little one and picking the right investment plan is no exception. Investing options can, however, be extremely confusing and risky. Especially when it’s your little one’s future and financial well-being that is at stake.
With the rising inflation in today’s world, the need to put your money in the right place has become a necessity no person can afford to escape. However, choosing the perfect investment plan to suit the unique needs of you and your family, keeping in line with your child’s prospects and unanticipated financial needs is nothing short of a herculean task. Skimming through multiple policy documents and plans can be daunting and it is extremely important to seek out information from the right sources.
It is common knowledge today that investing in long term investment plans is the choice of the smart investor. But the choices available are plenty and puzzling.
Feeling lost or anxious about how to do it right? Let us walk you through a couple of the best plans that you can choose for your kids.
Child Insurance Plans
A lot of parents invest in child insurance plans to take care of financing the education of their kids if the parent is no more. This kind of plan provides a lump-sum amount to the child/children in case of the death of the parent along with a waiver on future premiums. The insurance provider continues investing on behalf of the policyholder.
Instead of buying gold as a physical commodity, one has the option of investing in gold funds or ETFs (traded in the stock market electronically). This option removes the issues related to purity and authenticity and assures prompt liquidity.
Child Oriented Mutual Funds
To invest in equity mutual funds according to your children’s goals when they are at least seven to eight years away from achieving it is a good option to consider for a young parent. It is advisable to build a core portfolio with a couple of schemes that are consistent in their performance across large-cap and mid-cap funds. Term and mutual funds together provide the double benefits of investment and security cover. Most financial advisors readily advocate this type of investment.
A unit-linked insurance policy plan is a hybrid model combining life cover and investment. New-age ULIP child investment plans have become an affordable investment option with no premium allocation and policy administration plan charges. Policyholders also have the benefit of enjoying ULIP returns tax-free in addition to exemptions on premiums that may be paid towards keeping the policy active under sections 10D and 80C of the Indian Income Tax Act (1961).
A good child investment plan must be flexible and dynamic to suit all the unforeseen needs that the changing world might untimely put forth. They can be utilized keeping in mind the milestone events of your child’s life like university education and wedding. Every scheme will have its distinct structure, features and will work differently. It is therefore important to keep all points in mind before finalizing the plan of your choice.
Christmas is an extra special occasion for kids. They await receiving the presents that they wish for most during the year. But you can be a step ahead by marking this occasion as one of making the smartest choice to brighten your child’s future. Let this Christmas be the excuse for you to play Secret Santa and give them the gift of a life of financial well-being and security.