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Investment Plans For Your Kids

IndianMoney.com Research Team | Posted On Tuesday, November 19,2019, 05:44 PM

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Investment Plans For Your Kids

 

 

Kids are the apple of your eye. You would do anything to give them a bright future. Why not save and invest in some great financial instruments?

The cost of quality education is high and marriage expenses have soared through the years.  Your children will not enjoy a good education or a bright career if you don’t make the right investments.

Let’s take a look at some great investments which could guarantee your children, everything they seek in life. Want to know more about Investment Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial product.

Investment Plans For Your Kids

Public Provident Fund

Public Provident Fund or PPF is a great investment for conservative investors. It’s extremely safe and enjoys a Sovereign Guarantee. It currently offers 7.9% interest for the October to December quarter. This is a higher interest rate than the fixed deposits, which merely offer 6.5-7% interest a year.

PPF has a lock-in of 15 years. This means you are forced to stay invested for the long-term as you can’t touch the money. You enjoy compounding returns or return on return till the money grows into a tidy sum when your children need it.

PPF is also great as a tax-saving tool. It enjoys the EEE benefit. You enjoy an income tax deduction under Section 80C up to Rs 1.5 Lakhs a year. The interest earned and the amount withdrawn at maturity are tax-free.

You can also take a loan against PPF at rates which are 2% above the PPF rate. This loan against PPF can be taken from the 3rd financial year till the end of the 6th financial year.

See Also: All You Need To Know About Sukanya Samriddhi Yojana

Child Education Plans

The child education plan is insurance cum investment. You can create a financial corpus for your children’s education and marriage. You also have the option of adding riders to enhance the coverage of the child education plan.

The child education plan is nothing but a life insurance endowment plan. You simply pay the premiums and enjoy a lump sum at maturity. This money can be used to give your children a quality education. The child education plan also enjoys a tax deduction under Section 80C of the Income Tax Act.

Don’t forget to take the waiver of the premium rider with the child's education plan. On an untimely demise of the parent, the insurer keeps the plan active. The insurer funds the policy by paying the remaining premiums. With the child education plan, your kid’s education would never be detailed. The child education plan with a waiver of premium rider makes twin-payouts. The first payout on the death of the parent and the other at maturity of the plan.

See Also: Secure Your Girl Child's Future with Sukanya Samriddhi Yojana

Sukanya Samriddhi Account

This is a special investment plan, to give your girl child financial freedom. This is a Government of India backed saving scheme for the girl child. You can easily fund the marriage expenses or higher education of your daughter.

The Sukanya Samriddhi Account can be opened anytime before your girl child turns 10. You enjoy a high-interest rate of 8.4% for the October to December 2019 quarter.

This account enjoys the EEE tax benefit. While the investment in the Sukanya Samriddhi Account enjoys the Section 80C benefit, the interest earned and the amount withdrawn at maturity are tax-free.

What’s special about the Sukanya Samriddhi Yojana Account is it can be opened with just Rs 250 at the post office or authorized commercial bank branch. The Sukanya Samriddhi Yojana scheme remains active 21 years after opening the account or till your daughter’s marriage after she turns 18.

The Sukanya Samriddhi Yojana scheme pays the highest interest, next only to the Senior citizen saving scheme rates. In the Sukanya Samriddhi Yojana, the accrued interest and account balance is paid directly to the girl child.

See Also: Financial Planning For Children Education

A Mutual Fund for Your Children

Invest in an equity diversified mutual fund for your child’s education and marriage. You can do this through a systematic investment plan or SIP. SIPs are not mutual funds, but just a method of investing in mutual funds.

Investing in equity diversified mutual funds is for the long-term. You have to stay invested for at least 5 years or more which makes it ideal for your child’s education.

Invest in equity funds through SIPs, if you want to send your children abroad. These equity funds could give returns like 8-12% a year and this makes it a great investment. Do understand that these are high-risk investments, but you could enjoy compounding returns or return on return.

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