Investment for Children’s Education: Saving is essential for your child’s future dreams. Please plan to secure their education. Children’s education costs increase daily, and parents are understandably concerned about their future.
Investing in long-term goals can alleviate these worries and set the stage for making your children’s dreams a reality.
Parents face substantial financial challenges from school admission to higher education in supporting their children’s academic endeavors.
Reports indicate that children’s education is a top financial priority for adults, making it crucial to take the necessary precautions to secure their future.
The increasing cost of education presents a formidable financial challenge, and even a tiny mistake in saving for these expenses can lead to significant difficulties in the future.
Investing thoughtfully and strategically is essential to achieve your children’s educational dreams. Investing with the future in mind is essential as educational fees continue to rise. Planning for the long term is imperative.
Ignoring the impact of inflation can make it challenging to achieve your financial goals. Therefore, it’s advisable to begin investing in SIPs (Systematic Investment Plans) in small amounts and to follow through with a well-structured investment plan.
Premium waiver rider policies, notable insurance, and mutual fund schemes designed for children’s future needs should be carefully considered when planning for their education.
Additionally, it’s essential to prioritize investment goals and avoid the mistake of spending rather than saving. Compound interest benefits should be noticed, and a comprehensive financial plan for children should be established immediately after marriage.
Procrastination when investing in your child’s higher education can lead to missed opportunities as time passes quickly.
Delaying investments can significantly impact the total value of returns, emphasizing the importance of a separate financial plan for children immediately after marriage.
Diversifying investments is critical to mitigating the risk of relying on a single scheme and maximizing returns.
Allocating investments across equities, debt schemes, real estate, and gold is essential for building a robust investment portfolio over a 15-20-year timeframe.
60-70% of investments should be allocated to equities, while the remaining 30-40% should be diversified across debt schemes, real estate, gold, and other investment options to foster steady growth.
Parents should prioritize obtaining adequate financial protection before making investments. Specifically, they should acquire suitable insurance policies to cover the costs of children’s education and other responsibilities.
For an individual, it is important to have a life insurance policy that’s not just a number but equates to at least 10-12% of their annual income.
Acquiring a health insurance policy of at least Rs. 10 lakh to cover the entire family is also crucial. By doing so, you can protect your children’s education funds, and you won’t have to dip into them for unexpected medical expenses.
List of Savings plans to help with children’s education expenses
These days, education has become a business. Parents often need to pay substantial fees to enroll children in schools and nurseries, sometimes amounting to lakhs. Furthermore, the costs can escalate even more if they pursue higher education.
To prepare for these expenses, it’s essential to start saving for your children’s education as early as possible. Here are some investment schemes you can consider for saving for your children’s higher education:
Public Provident Fund (PPF): PPF is one of the most reliable savings schemes available through banks like LIC and the Post Office. Investing in PPF can significantly benefit your children in the future.
You can invest up to Rs. 1.5 lakhs per year, and the flexibility allows you to invest small amounts at any time. Investing in this scheme for 15 years can be very helpful for your children’s education.
Investments that Provide High Returns: Life is unpredictable; while things may seem reasonable now, the future can bring financial challenges. In economic crises, you may face difficulties funding your child’s education.
Therefore, it’s crucial to make safe investments that offer high returns. While maintaining savings in banks and post offices, consider investing in other schemes that yield higher returns. This can help alleviate financial stress in the event of inflation.
Life Insurance Scheme: Parents have a significant responsibility from the time their child is born until they secure a good job. Investing in a life insurance scheme, particularly with LIC, is wise to ensure lifelong benefits. This type of investment can provide peace of mind while raising your children.
Advance Planning: Many parents find it challenging to provide their children with a good education today. Understanding the costs involved and planning your savings accordingly is essential.
While many banks offer instant education loans, repaying these loans can be difficult for some families. Therefore, it is crucial to plan for your children’s education expenses in advance.
What to Consider Before Saving:
- It’s advisable to start saving for your children’s education at birth or before they turn five.
- Assess how much you can reasonably save according to your budget.
- Be aware of any income tax benefits associated with the savings you accumulate.
By considering these aspects, you can better prepare for your children’s educational expenses in the future.
Best Investment Options for Children’s Future
It’s essential to start investing or saving now to secure your children’s future and provide them with financial stability.
Various investment options are available for today’s parents, ranging from the recently launched NPS Vatsalya scheme by the central government to the Sukanya Samriddhi Yojana, bank fixed deposits (FDs), mutual funds, and special recurring deposit plans for children. In celebration of Children’s Day, we present some of the best options.
NPS Vatsalya: The Government of India has recently introduced the NPS Vatsalya scheme under the National Pension Scheme to empower children’s financial future across the country.
Parents can start investing for their children with a minimum amount of ₹1,000, with no maximum limit. This scheme guarantees market-linked long-term investment returns.
Gold ETF: Gold Exchange-Traded Funds (ETFs) are an appealing investment option that offers better returns than bank FDs and savings accounts.
They provide good returns with less risk compared to the stock market. By investing in a gold ETF, you can take advantage of rising gold prices to achieve favorable returns.
Children’s Special Recurring Deposit Plans: Many banks offer particular recurring deposit (RD) plans for children, similar to FDs.
With these plans, you can begin investing a small amount and benefit from high returns. A fixed amount can be deposited monthly for a specified period in a recurring deposit account, providing FD-like advantages.
Mutual Funds: Child savings plans in mutual funds (MFs) can be an excellent choice for those who prefer a lower-risk investment.
By investing in MFs rather than directly in stocks, you can participate in the stock market with reduced risk. This approach provides two primary benefits: 1) potential high returns from stock market investments in the long run and 2) lower risk.
Sukanya Samriddhi Yojana: Implemented by the central government specifically for girls, the Sukanya Samriddhi Yojana (SSY) currently offers an attractive interest rate of 8.20% per annum on deposits.
An account for your daughter can be opened with a minimum deposit of ₹250, but it must be established before she turns 10. Additionally, parents can benefit from income tax deductions on their investments in this scheme.
Children’s Special PPF Account: Opening a Public Provident Fund (PPF) account for your children can help them accumulate wealth for their future.
This account has a lock-in period of 15 years. Although money can be withdrawn earlier, it should be for the child’s benefit. Both parents can invest jointly in a child’s PPF account.
Children’s Special Fixed Deposit Account: Special fixed deposits tailored for children are also available, with many banks offering attractive interest rates.
Notable options in the market include the PNB Girl Child Education Scheme, PNB Uttam Non-Callable Term Deposit Scheme, YES Bank Fixed Deposit for Children, and SBI Child FD.
Considering these options, you can secure a financially stable future for your children.