Why Should You Plan for Your Child's Education?

Why Should You Plan for Your Child's Education?

Only very few things in life can compare to the joy of becoming a parent. After that, the happiness and safety of your kid become the top most priority in your life. That also includes planning for their future so that they do not have to worry about anything.

With a suitable child plan, you can create an efficient backup plan for them. It will allow them to have the freedom to explore career opportunities without making any compromises due to financial insufficiencies. That is why it is essential to know why planning for your child’s education is a must.

Why Planning for Your Child’s Education is a Must?

There are many options that you can consider while investing money for your child. Investing for your child’s education is very crucial as education is the future of your child. And a better life is ensured if children receive a good education. And when you become the one who invests in their future, they will forever be grateful for it. Also, you will have a sense of pride knowing that you played a part in helping them to get the best education. Given below are 5 reasons why planning for your child’s education is a must.

Increasing education expenses

Quality private education costs more now than ever before. Alongside, other educational costs continue to rise owing to a multitude of factors, including inflation. Parents who want to assure good education to their children have to shell out more than ever before. It often causes a huge burden on the family’s financial resources. Investing in a child’s education plan from the very beginning can ensure that such concerns do not crop up when the child is in need of money for education.

Protecting the child’s future

With a child’s education plan, it is possible to create a bright future for the child even when their parents aren’t around. Having a child education plan in place will ensure that they never have to worry about any disturbances in their studies. They can also achieve their dreams without being worried about the financial implications.

Tax Benefits

Premium paid on a child education plan usually are eligible for tax benefits under the provision of section(s) 80C, and 10 (10D) as may be applicable. Though these benefits may be subject to change from time to time, you can claim some tax benefits in the form of exemptions upon payment of premiums.

Save your child from the burden of education loans

Education loans from banks usually have a very high rate of interest. This causes the child to remain in debt for a very long time. Loans also severely dampen the spirit and act as a huge obstacle for young professionals. Especially when they begin their career with massive financial debt. Furthermore, it also risks their ability to start saving or investing from the beginning of their career.

Easy access to money for whenever the child requires it

A child education plan will equip the child with the power to dream big when it comes to education. Most plans have an option for payouts as and when the child needs them. It allows the child to analyse their opportunities carefully and then achieve their dreams. A child education plan safeguards a child’s future when it comes to education. It also equips them with the freedom to plan for their own career. And all this is possible without the lack of financial resources acting as a restraint.

Investment Plans Suitable for Child Education

Now there are several established modes of investments that people often choose to increase their capital. You should invest your money in the right financial instrument to grow wealth. Because if you do not make the right investment decision at the right time, you surely are missing out on opportunities to increase your earning potential. If you don’t invest wisely, then the potential to lose wealth is much higher as compared to not investing in the first place.

If you are looking for the best long-term investment plan for a child, then a child insurance plan could be your best bet. They are a combination of insurance and investment that ensure a secure future for your child even in the event of your untimely demise. There are also several other plans which people go with to bear the expenses of their child’s educational costs. The listed below investment plans are some of which you can use for your children’s future educational needs.

Public Provident Fund (PPF)

PPF is one of the well-known investment schemes which offers fund protection. It also guarantees returns that are exempted from tax up to a certain amount. The rates of interest in PPF accounts are pretty high compared to fixed deposits and recurring deposits. The minimum amount you can invest in a fiscal year is INR 500, and the maximum is INR 1,50,000.

Mutual Funds

Mutual funds are another form of investment that generates higher income over a long period of time. It is a common pool of money where multiple investors invest in equities, bonds, and other market instruments. Mutual fund schemes except close-ended and ELSS schemes do not have a minimum investment period. All these benefits make mutual funds suitable for long-term investment of large capitals.

Unit Linked Insurance Plan (ULIP)

ULIP is a financial instrument that facilitates investments in equities and bonds while offering insurance protection at the same time. It is an integrated plan in which one portion of the investments are apportioned towards stocks and bonds as chosen by the individual, and the remaining is maintained as a life insurance cover. With ULIP, you can get the benefits of investment and insurance from a single plan itself.

Long Term Fix Deposits

Fixed Deposits, the traditional model of investment, are also suitable as child education plans. Fixed Deposits are especially suitable for people looking for guaranteed security of their investment. You can open a fixed deposit account in any bank with a specific duration, such as 1, 2, 3, 5, 10 years, or more. You can also start a fixed deposit account at a fixed rate of return ranging between 3% to 6.5% per annum. The return rates changes depending on the financial agency or the recent RBI rules and regulations. And the capital, along with interest, is withdrawn at the end of the tenure.

Investment in Gold

Gold has always been the most basic form of investment. The benefit of investing in gold is that gold rates are always on par with the current inflation rates. So, by investing in gold, you can assuredly beat inflation. Investment in gold always acts as perfect protection against inflation and during times when the markets are volatile. Nowadays, several parents make investments in gold in the form of ETF or gold mutual funds. It is because experts advise avoiding investments in the physical storage of gold due to the risk elements involved in handling and safekeeping.

Post Office Savings Schemes

This is one of the oldest forms of savings available with post offices across the nation. A wide range of savings schemes is available with the post office, such as post office savings account, monthly income scheme account, National savings certificate, etc. With the backing of the government and wide presence, post office savings schemes are suggested by many for security and better interest rates.

Real Estate

Investors often consider buying and reselling land and building a safe bet. It is a great investment option that is certain to gain value with time. You can use real estate as a part of your overall wealth-building strategy if you have a reasonably good sum to invest.

Conclusion

An essential investment a parent can make is in their children’s education. A child who graduates from college will likely contribute to society and earn more in his lifetime than one who does not. Investing in your daughter or son’s education will substantially affect their and your lives. So, it is never too soon to start planning for your child’s education.

If parents think ahead and plan with a reputable financial planner, they can maximize the value of their savings. This information on a child education plan will definitely answer the question you had in our mind of why planning for your child’s education is a must.

Disclaimer:

The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

Suggested Plans

Bharti AXA Life Shining Stars

  • Non-linked, non-participating limited pay endowment Life Insurance plan
  • Designed to take care of the financial needs of your child.
  • Flexibility to opt between 2 Maturity Payout Options
  • Flexibility in Policy Term/Premium Payment Terms
  • A great short-term investment option for a child insurance policy.

Bharti AXA Life Super Series

  • A non-linked non-participating individual life insurance savings plan
  • Range of investment duration and returns
  • Guaranteed money back benefits (provided policy is in force and all due premiums have been paid)
  • Income tax benefits (as prevailing tax laws in India that are subject to changes)

Bharti AXA Life Guaranteed Wealth Pro

  • A non-linked, non-participating individual savings life insurance plan
  • Flexibility to choose the payout structure
  • Multiple income options
  • Option to receive tax free income beginning from the second policy year itself
  • Option to get lifelong income along with life cover till 100 years of age