Children are everything to their parents, and they work tirelessly to provide the best for them. When it comes to their education and financial security, timely investments must take precedence. Because school prices are rising, it is more crucial than ever to invest in your child.
What Is A Child Savings Plan?
A child savings plan is an investment and insurance plan that provides financial security for your kid’s future by building a corpus over time. When your child’s savings plan matures, you will get a lump sum payment that may be utilized to pay for your child’s higher education and marriage expenditures.
While you are developing the corpus to achieve these goals for your kid, the insurance plan serves as a safety net for the corpus in the event of your untimely death. In the terrible event that you die before completing the objective, the plan can invest the money on your behalf and provide the maturity amount you intended for your kid.
As a result, a child savings plan is part of a wider category of child-specific financial products that also includes child savings plans. Child savings plans are a combination of insurance and investment solutions that secure your child’s financial stability in the future. At the end of the policy period, these plans pay out the life insurance in a lump payment.
Best Child Savings Plans
You’ve come to the correct spot if you’re a parent seeking the greatest investing alternatives for your child’s future. Some of the greatest investments for children have been recognized by our financial gurus.
1. Investments in Gold
Gold is an excellent hedge against stocks, particularly during times of market volatility. Parents invest in gold through ETFs, E-Gold, and gold mutual funds. Experts recommend avoiding physical gold investments to limit the danger connected with physical gold storage.
2. Equity Mutual Funds
Deposits in equity mutual funds rank high on the child savings plan. The extended period of 10-15 years and the investment style offered are the two key reasons for this. Equity funds have a track record of providing yearly returns ranging from 12% to 15%.
3. Recurring Deposits
If you are searching for a low-risk investing plan for your children’s future, recurring deposits are a good option because interest rates are at an all-time high. You may secure the RDs and make plans for your child’s future. In India, both banks and post offices provide recurring deposits.
For example, a monthly investment of Rs 1000 might yield Rs 2 lakhs after ten years. The Indian Postal Service’s official website also has a child plan calculator for calculating the returns on your monthly investment.
4. PPF
If you are searching for a long-term investment plan, consider PPF, which allows you to lock in your assets for 15 years. A minimum of 1 lakh can be invested every year, with an annual return rate of 8.75 percent. Post offices and banks may both open PPF accounts.
5. NSC
The NSC, or National Savings Certificate, is the most effective and time-tested means of saving for your child’s education. National saving certificates can be purchased for five years and then reinvested when they mature.
The current rate of interest is 8.10 percent, and a certificate may be purchased for as low as Rs 100. Investments of Rs 1 lakh per year qualified for the IT refund under section 80C of the Income Tax Act.
6. ULIP
Though many people dislike ULIPs, they are excellent alternatives for low-risk investors. Any of the ULIP programs can provide yearly returns ranging from 4% to 6%. However, keep in mind that ULIP schemes should be the final option when compared to the other child savings plan accessible.
How do children’s savings plans work?
Saving programs for children provide you with two major advantages. These plans let you save money for your children’s future needs while also protecting them financially in the event of an unforeseen incident.
Here’s an illustration of how these child savings plan work:
Sachin purchased a child savings plan and invested monthly to save for his daughter’s college future. Sachin can utilize the maturity money to pay for her additional education at the end of the insurance period.
If Sachin dies within the policy period, the claim amount will help to ensure that his daughter may complete her studies and fulfill her ambitions.
What Is A Child Plan Calculator?
A child plan calculator is a basic tool meant to provide parents with an estimate of how much money they will need to meet their children’s life objectives. Every parent desires to offer the greatest school for his or her kid or to throw the grandest wedding reception for their child.
With the growing cost of necessities, it is vital to have significant savings to meet the needs of children in the future. A child plan calculator estimates the amount of money that must be saved to pay for all of the child’s future demands.
Long-term investing is the greatest strategy to build sufficient money, but it is tough to determine if you are saving enough. If one’s funds are insufficient, he or she may not be able to realize long-cherished kid aspirations.
Wrapping It Up
In India, parents are always anxious about their children’s education and the funds necessary for their children’s marriage.
Parents will consider how to invest in their children and provide stability for their future even when they are not present. Early planning can be beneficial. There are three things to consider while investing in the child savings plan.
Life objectives such as children’s education or marriage need a significant amount of money, which the average individual cannot amass in a few months. Saving and investing for years is required to accumulate enough cash to provide a decent education for children.
A child plan calculator can assist in determining the monthly contributions necessary to attain their children’s life objectives.