Choosing the very best investment plan for children is not a piece of cake, and neither can it be called rocket science. You should always have a suitable financial planning guideline in place since it is a necessity if you want your investments to work out well in the future.
Building a Financial Plan- Some Tips
The best investment plan for children should be determined by your own objectives and financial targets. Here are some essential things worth noting.
- List the future requirements of your child as the first step. These may include higher education, weddings, other goals, and so on. Always factor inflation into the mix while calculating the amount that you will require in the future for this purpose.
- Start investing and saving as early as possible. This will help you benefit from compounding and save an adequate sum to fulfill the desires and needs of your child.
- Ask yourself about your risk appetite threshold and your specific financial scenario. This matters a lot, indeed. Ask yourself this question to determine your allocation of investments towards diverse instruments and options. Also, calculate the amount you can deploy for investments monthly, after deductions of your expenses and other financial commitments.
- It goes without saying that these investments for your child should be separate from those for other objectives like home purchases, retirement, etc.
- Insurance coverage is a must when you start choosing the best investment plan for children. This will give them a financial safety net in case anything happens to them down the line.
Taking these pointers into consideration, you can opt for a mix of investments to secure your child’s financial future. Firstly, check out a child plan or child savings plan as the moniker goes. This is mostly a policy that offers substantial life coverage to the child to take care of financial needs in case of the policyholder’s demise within the policy period. At the same time, you can also invest in diverse market-linked instruments to build a future corpus that can be withdrawn to meet the higher education requirements of your child and other financial needs. Secondly, ensure that you otherwise have suitable life and health insurance coverage for every member of the family, including your child. Thirdly, compare child plans offered by insurance companies and evaluate the type that you wish to opt for, i.e., endowments or ULIPs. The former offers assured returns at maturity in addition to life coverage for the parents. These plans have lower risks, and the returns are comparatively lower as well. ULIPs are market-linked policies with the chances of earning higher returns in the long run, although the risks are also higher. Life coverage is also given to the policyholders within the plan period. These plans also come with handy tax deductions that will help you save some more money as well. Take all the options into account and choose your best child investment plan accordingly.
