4 Best Investment Plans for Your Child

4 Best Investment Plans for Your Child

When your child is born, they are a completely new person who has the potential to change the world. As a parent, it is your job to nurture that potential and help them grow up and become what they are destined to be. However, some dreams and aspirations feel unattainable for regular families because of the financial constraints. To help you deal with this problem, you should look for the best investment plan for a child.

Money should never become a barrier between a child wanting to pursue a certain career that they feel passionate about. However, more often than not, parents, as well as children, have to make compromises on their choices based on their financial standing. Sometimes children have to adjust for a career that they can pursue and their parents can afford. This does not always have to be the case.

Investing for your child’s future from their birth can help you save up enough corpus that can help them pursue any career that they want. It also reduces any sudden monetary burden on yourself that would require you to take loans to fulfil your requirements.

Investments come in different forms, and you have to know about each type of investment, its benefits, and how it can help you create a sizeable corpus to help you support your child’s dreams. This information will also help you find and choose the best investment plan for a child which best suits your requirements.

Things You Should Know Before Investing for Your Child

Investing is not a simple task; nowadays, investment companies have made it very simple for you to start investing, but there are various things that you should know to make sure you are not getting scammed in the end. Investment opportunities have a lot of fine print, and if you jump into the policy which many companies try to force you into, you will not be able to reach your goal corpus, and the companies will deny any and every liability at that time.

So, proceed with caution, and please keep these points in mind.

Plan Long-Term

Investment options that promise high returns on a short-term investment are either fraudulent promises or come at an insane amount of risk, both of which can lead you to lose your hard-earned money. The reality is that investment is a long-term process, and for you to get high returns, you have to wait a considerable period of time.

So, when you are planning on searching and investing in the best investment plan for a child, you have to remember that long-term investment plans are the ones that can get you your desired results safely and with assurance. So, make sure you think long-term and have an idea of the monetary figure you will need in your future so as to aim for that goal and plan your investments.

Have a Diversified Portfolio or Invest in Plans with Assured Returns

There are usually two ways to invest; you can invest in a diversified portfolio of different options that all give varying returns which combined can get you to your goal amount. Or you can invest your money in a fund that has guaranteed returns and plan your investment accordingly, so you can get to your goal amount using a single investment option only.

It should be known that managing a diversified portfolio of investment requires a hands-on approach to investment where you would have to manage the ratio of your investment according to market trends to make sure you are getting/earning the best returns imaginable. If you have the time and knowledge, you can actually get the best market returns by investing in this process, but it is a difficult process.

Most people don’t have the time and knowledge to do this, so the safe way for you to invest that does not involve any of the risks is to invest in a guaranteed returns fund. These funds will offer a lower return rate than the industry best, but you will get those returns regardless of the market trends. This will help you reach your target value in the required time if you just keep investing. So, know about your investment strategy before you pick out the best investment plan for a child.

4 Top Investment Plans for Your Child

 

Public Provident Fund

A Public Provident Fund or PPF is a lucrative investment plan that can help you build a healthy corpus that you can use for the education of your child. PPF is a 15-year investment plan that comes with a higher lock-in period than most other plans, but it also has a good benefit. This investment plan has tax-saving features under Section 80(C) of the Income Tax Act, 1961. However, tax laws are subject to change from time to time.

You can save/protect as much as 1.5 lakh rupees per year from taxes legally when you invest in this plan. For people that are keen on investing with very low risk, this is one of the best investment plans for a child for them. The current rate of returns for this investment plan is 7.1% which is moderately high while also being very safe for people not interested in a risky investment process.

Child Education Plans

A child education plan financially safeguards your child's future and also helps in saving your hard-earned money. It ensures that you face no financial hassle while looking for the best education/future to your child. It also helps that your child can continue with his or her education, even in your absence. Following are some benefits of child education plans :

  • Comprehensive protection to your child in the event of your unfortunate death
  • Guaranteed payout of the targeted amount
  • Flexible Options to receive returns (Lump Sum or Regular Incomes)
  • Tax Benefits*
 

Gold or Silver

Gold/silver are some of the most popular and reliable investment options for a major portion of society. There are many reasons for that; gold is such a commodity that over time the possibility of it depreciating in value are close to none, so it is practically impossible for you to lose money on your investment. Over the last ten years, it has been noticed that gold investments have provided some of the highest returns of all investments.

When you are planning on finding and investing in the best investment plan for a child, gold and silver investments can be a good option for you. However, there are some drawbacks that you should be aware of when investing in gold. The value of gold is bound to increase almost definitely over time, but it is difficult/hard to predict how much it will increase. So, even while being the safest form of investment, it still has a possibility of not meeting your goal amount if you don’t invest heavily.

The golden rule for investing in gold is to know that the price of gold remains stagnant for long periods and rises swiftly in short periods. These windows cannot be pre-calculated so, it is also somewhat risky to invest in gold for your child’s education because there is a lack of guarantee in the process.

Mutual Funds

Mutual fund investments are one of the most popular forms of investment today as it has made investment easier for everyone. Mutual funds are very popular because you can start investing very easily in mutual funds, and you can get high returns while doing so if you have some knowledge of what you are doing. Mutual funds are risky; any form of high returns that come with mutual funds come at a high risk as well.

To get the most benefits out of investing in mutual funds, you need to have a hands-on approach to your investment so that you can make sure you are getting the best returns that you can get/earn from your investment. This is something you need a considerable amount of time and knowledge for, so you must tread lightly. As it is always said, mutual investments are subject to market risks, so you have to understand the risk and then move forward with your investments.

Disclaimer:

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
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.

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