Once we become parents, all our thoughts revolve around our children. The little ones become our world and we go to any extent to provide our kids with the best of the things within our capacity. Well, as we think about their present, we also need to be concerned about the future of our kids. And when we talk about the future, securing their financial wellbeing is one of the most important things, so that even if something happens to us, they can continue with their education and future without any difficulties.
We as parents make various investments so that we can get the best returns which can be used for the education and marriage of kids later in life. Well, one of the best investments that you can do is to buy term insurance, so that you can be certain that even when you are not around them anymore, your kids can still carry one with their life without facing any challenges regarding the finances. You can start as early as possible to get the best returns which you can use for several purposes related to your kids.
Apart from term insurance, several other investment plans can offer a good return. So, let us take a look at the various child investment plans that are available in the market.
Fixed Deposits (FD)
Fixed Deposits or FD is one of the traditional models of saving and has been one of the successful ones too. This investment plan provides total security to the savings. An FD account can be opened in any bank for a specific duration, which can be 3, 5, or even 10 years. The rate of return remains the same, which ranges between 3% to 6.5% per annum. You can withdraw the capital along with interest once the tenure is over. The only challenge that comes with this investment plan is that there is no option for early withdrawal without penalty.
Sukanya Samriddhi Account (SSA)
This is a wonderful investment plan that was initiated by the Government of India. Parents of girl children can open an account, and they have to pay a minimum of INR 250 every year to keep the investment going. Parents have to pay till the 15th year from the time of account opening, and the money can be withdrawn once the girl child is 21 years old. The interest rate offered in this account is 7.6%.
Public Provident Fund (PPF)
This is very similar to that of the Employee Provident Fund (EPF). A PPF account can be opened by anyone, and you do not need to belong to the salaried class necessarily, unlike EPF. the lock-in period of a PPF account is 15 years and the rate of interest is quite higher than an FD or savings account. Under a PPF account, you can also claim tax under Section 80 C.
Stocks & Mutual Funds
If you intend to invest in the stock market, you really need to be a risk-taker. However, the returns you will get from this are handsome and surely convince you to go for this option. You can either invest in stocks directly or take the SIP route in mutual funds to come up with a long-term investment plan. The returns rate that you can get by investing in stocks is between 12% to 16%. If the economy is thriving, you can even expect higher returns that range between 20% to 30%. There are various funds that you can choose from, such as debt funds, small-cap, mid-cap, and large-cap, and many more.
Unit Linked Insurance Plan (ULIP)
ULIP is best for individuals who are looking for investment returns and insurance protection. You can get high returns through ULIP and as compared to other investment options. In case of your early demise, your family will be eligible for the insurance payout. The plans of ULIP participate in equity markets; therefore, the returns are much higher than many other types of insurance.
These are just some of the investment plans that can help in securing your child’s future. However, you must compare them before you make an informed decision. To know more about the investment options for children, you can visit the website of IIFL at your convenience.