Parents willingly give up luxuries to provide a bright future for their children. Furthermore, with the cost of education rising at a fast pace, it just adds to their troubles, yet that can never be a reason to give up on it.
As far as investing for children is concerned, parents are trying to explore new avenues. Be it school education or higher education – there is indeed an urgent need to have long-term investments for children. In the following section, we will discuss innovative and realistic ways which can be immensely helpful in planning small investments for your children.
- Investing in Mutual Funds through SIP
You can opt to invest in mutual funds through Systematic Investment Plan (SIP), which is now the most favoured method to invest in a mutual fund scheme that aligns with your goals. By investing a small amount every month, SIP route helps to inculcate the required investment discipline and also rides out the market fluctuations. And not to forget, the benefits provided by rupee cost averaging, wherein more units are purchased when the market is down, and fewer units are purchased when it is high.
- Investing in Child Plans (ULIPs)
You can invest in child plans, or ULIP plans to secure your child’s future as well. Several life insurance companies are offering ULIP plans to fulfil your child’s needs and requirement during his/her growing stages. All you need to do is choose the ULIP plan for your kid that appears the most convenient for your family and your finances. Moreover, ULIP plans provide you with features such as switching between various funds (equity to debt and vice-versa), top-up facility, tax benefits and options of surrender.
- Investing in Public Provident Fund (PPF)
Public Provident Fund (PPF) is another long-term option which definitely caters to future plans of your loved ones. The maturity period for this specific perspective is 15 years, which is lucrative, and it offers tax benefits as well. In case of an urgent need, PPF authorities now allow partial withdrawal of sum without any hassle. One of the basic reasons which make PPF a lucrative investment option is the EEE feature and the flexibility associated with it. Yearly, a minimum investment of Rs 500 is required, and the upper limit is Rs 1.5 lakh per account. Additionally, if required, the maturity period can be extended by 5 years at a time.
- Investing in Sukanya Samriddhi Scheme
The Sukanya Samriddhi Scheme was launched as part of ‘Beti Bachao Beti Padhao’ campaign. It is exclusively for girl child of the family. An account can be opened any time after the birth of a girl till she turns 10. The good thing about this scheme is, the account remains operative for 21 years from the date of opening or till the marriage of the girl. Similar to PPF, Rs 1.5 lakh can be deposited in this specific account. The good thing is, currently the scheme gives 8.1% interest, and there are income tax benefits as well. The tax benefit feature of this scheme gives it the required edge.
- Investing in Gold
Investing in gold is considered to be the most traditional method of investing for long term. Be it gold ornaments or Gold ETFs, investing in gold is lucrative as gold prices rarely go down even in volatile moments of share market. Even if the market crashes out, gold gives a better purchase than most other shares. Side by side, it also acts as a hedge against equity. Even gold jewellery is considered to be profitable in this aspect. But in case of jewellery, be prudent and choose only the hallmarked one.
The multitude of different investment plans for a child’s future provides a situation that is vital to take advantage of. While trying to invest, time is always an asset, and tax-sheltered investments help to ensure that your earnings are not slowly eaten away. So, prioritise the goals of your kids and invest in the instruments mentioned above to carve a better future for them.