Must-have long-term investments for your child

Last Updated: Mon, Mar 12, 2018 13:15 hrs
Sukanya Samriddhi Scheme

As a parent, you must dream of a bright future for your child and making the right investment is a vital step in doing so. You must do it to ensure safety from any type of risks in the future. There are several investment options available in the market, but you have to choose the right one for your ward.

Parents generally focus on the major goals for their child such as marriage, education and a comfortable lifestyle for them. All these goals have different requirements, hence it is essential to think about each stage and do the required investment that can fulfill these requirements.

When should you buy an investment plan for your child?

The earlier you plan, the more benefits you will get. Some parents start making the investment just after the birth of their child and some even start before it. It will be really good if you start early as you will have a bigger corpus. However, around 3% parents consider it only after the 12th or 13th birthday of their child, which is not a good practice because, with increasing age, it becomes difficult to get the appropriate plan.

Before investing, everybody wants to be sure about the returns and benefits that they will get in the future. Many questions arise in the mind regarding the amount of risk involved and the benefit percentage, long-term future of the plan etc.  Let us provide some clarity on some of the most prevalent options in the market, depending upon the risk-taking ability of an individual. However, do keep in mind that higher the risk, higher will be the returns.

What are the expenses?

Most of the people underestimate the cost of raising a child. Due to this, they face many problems in meeting their financial goals.

As a consumer, you must give attention to each and every information related to the desired investment option and choose it after comparing all the available choices. The cost of raising a child includes miscellaneous expenses on healthcare, education, clothing, entertainment, housing, transport and much more.

Before choosing any investment plan, it is essential to increase your knowledge about the same, only then will you be able to do a fair comparison of investment plans to get the best one.

Below are some of the best investment options that are vital for your ward and will provide a secure future.

Child Insurance Plans: A child plan is a good option that ensures your child's safety even after your death. This plan provides a lump sum amount to the child and rest of the premiums are waived off. The insurers, on behalf of the policyholder, will carry on the investment process. Later on, your ward will get the lump sum amount on a regular basis. Majority of parents trust this type of investment for the safety and bright future of their child.

Gold ETFs: Gold ETFs are also known as paper gold. Basically, they are mutual fund units in which a single unit is equal to one gram of gold. It requires a demat account for selling and purchasing process. The consumer needs to keep it safe.

Term with Mutual Funds: This is also a smart way to invest as it provides high corpus. Term plan is cost-effective in comparison to traditional insurance policies or child plans and yields higher returns. The combination of these two products provides you the dual benefit of investment and insurance coverage. Most financial advisors suggest this plan. They are affordable and hence within the reach of a common man.

SIPs: Based on your appetite and risk investment on can select the right SIPs. An individual here can amass a larger sum. For eg., A corpus of 1 crore is possible with an investment of Rs. 9000 for 18 years in an equity fund that gives a 15 percent return.

Sukanya Samriddhi Yojna: Sukanya Samriddhi Yojana (SSY) is one of the best child plans for a girl child in India. The scheme was launched by Prime Minister Narendra Modi under Beti Bachao, Beti Padhao campaign in 2015. The account can be opened at any Indian Post Office and some authorized commercial banks. The account can be opened any time between the birth of a girl child and the time she attains 10 years of age by her guardian/s. A minimum amount of Rs 1000 must be deposited annually. A partial amount can be withdrawn when the girl is 18 years of age for her higher education. The account reached maturity after 21 years from date of opening.  

So now that you are aware of the best investment options for your ward, you should opt for one to give a safe and secure future to your child. Apart from the plans and options mentioned above, you can also choose stocks, ETFs, PPF, FD etc which also hold good benefits. But do go through the related details before shortlisting the one best suited for you.

Naval Goel is Founder & CEO