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The world of investment explained from a 10-year-old’s perspective
Until a couple of decades ago, investment for a child’s future was not really a top goal for Indian parents. However, with the lapse of time, the need to save for the child’s education has emerged significantly.
Let’s talk about some figures. The tuition fee at premiere engineering course at Indian Institute of Technology (IIT) has increased from Rs 90,000 to Rs 2 Lakhs per annum. Statistics reveal that at rising inflation, the engineering course is likely to cost around Rs 17 lakhs in the next 8 years. This also indicates the need to invest in a child’s plan at the earnest.
The cost of an institution not only includes the fees, but it exceeds even more. As a bitter fact, higher education in India is an expensive affair. Hence, without proper planning and saving it is impossible for the parents to sponsor their child’s education with this inflationary environment.
Benefits of child plan
The best way to secure your child’s future is to save from today and be prepared for any contingency. Buying any of the best investment plans ensures the financial security, as they provide long-term benefits for your children.
- Ensure financial security to your child at the time of maturity.
- Are ideal to save for education or marriage.
- Act as a collateral option for higher education loan.
- You can show child plan as a deduction while filing Income Tax returns.
- They are helpful in managing school-related expenses of your child.
- Availability of dynamic and flexible plans as per the market prices in order to resolve the inflationary situation in the market.
- You can partially withdraw money as per your child’s requirement.
- It’s an investment not blockage of funds.
- These plans offer predetermined periodic payouts at the various stages of life.
- They act as protection against uncertainty.
Types of investment plans
Investment in your child’s future is one of the important aspects of parenting, which makes you ahead of your times. Before you buy a child policy, it is important to consider all the important aspects of the plans. This is because any such investment is a one-time process and gives you a lifetime benefit.
Here are a few essential features of the best investment plan for a solid future of a 10-year-old child.
- The most basic features will include the following:
- Tax deduction under Section 80C of the Income Tax Act
- Partial withdrawals from the sixth policy year
- Flexible plan as per changing needs of the child
- At the event of death, the plan assures the payment of the base sum
- The next set of features you should look for are a combination of financial care of your kids if the contingency strikes:
- The plan provides lump-sum payout payable immediately after death
- Continues building the corpus even after the death of the parent as if the investment continues
- May also include regular income options as death benefit along with lump-sum payment
- Moving over, since you are trying to invest in your child’s goals, the plan has to offer good investment management options too:
- Fund options as per your risk profile; i.e., Pure equity funds for aggressive investors, debt for safely building the corpus and so on
- Option to switch multiple times between funds, without having to withdraw
- Option to change fund allocation multiple times
- Options to switch systematically or dynamic fund allocation, so that your investment risk automatically goes down as you approach maturity
- An essential aspect of investing is the inexpensive management of wealth. The best investment plans will offer lower of the following:
- Minimal fund management charges
- Minimal fund allocation charges
- Partial withdrawals before maturity are not chargeable
- A number of free of cost switches between funds
- Additional features you may look for:
- Guaranteed benefits
- Additional unit allocations for long term investors
Child ULIPs (Unit Linked Insurance Plans) are the investment plans which fit most of the above features. These versatile investment options will not only help you invest aggressively in your child’s dreams but also, safeguard them from disasters like the early demise of parents.
Diverse investment options in ULIPs allow you to beat the inflation with your investments.Investment allocation options and switches can allow you to stay ahead of the education inflation and offer your child the needed support if not more.
To sum up, child Insurance plans help to build savings so that there is enough to finance your child’s education or marriage. They help you to prepare you for any kind of incontinences in future. Hence, it is advisable to choose one of the best investment plans according to your child’s need at an early age, say 10 years. The younger your child is, the more you can get the value of your investments for his better future.
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