College costs got you worried? Child investment plans are your saving grace
In the face of a challenging financial landscape, investing in your child's future isn't a luxury, it's a necessity
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Child investment plans, with their diverse range of options – guaranteed plans for stability, market-linked ULIPs for potential high returns, or balanced child capital solutions – offer a roadmap to navigate rising education costs and secure your child's dream education
In an era where the rising cost of living has significantly impacted every household's financial standing, parents strive to provide their children with quality education and a bright future. The escalating expenses related to education and other necessities have led to growing concerns about securing the financial future of one's children. To address this, experts recommend considering a Child Investment Plan, a financial safeguard for your child's future.
Vivek Jain, Head of Investments at PolicyBazaar.com, emphasizes the importance of Child Investment Plans for new parents seeking optimal investment options to ensure their child's education. He states, "If you are new parents and exploring investment options to provide the best education for your child, a Child Investment Plan is crucial. Planning for your child's financial security through early investments is essential, as the sooner you invest, the greater the benefits you can accrue."
Before initiating any investment, it is imperative to create a financial plan that aligns with long-term investment goals such as your child's higher education or marriage. With education inflation rates ranging from 9-10 per cent, today's college fees of 20 lakhs could escalate to approximately 1.5 crores after 20 years.
Every parent wants their child to have a good education. So you should start balancing your portfolio with returns and security as soon as possible. The formula for growing money works by keeping your existing capital safe and generating high returns on your investment. For this, you can consider guaranteed plans that are not affected by market fluctuations and offer returns of up to 7.5 per cent. These plans have a fixed maturity amount. And this plan is completely tax-free on annual premium payments of up to Rs 5 lakh.
For those who are looking for market-linked options, you can consider ULIPs or unit-linked investment plans. These plans are popular for historically providing returns of 14-15 per cent in the Indian markets under favorable market conditions. By investing in these plans, you can generate enough funds to fight the rising cost of education. If you are willing to take on market risk, you can earn good profits from these plans if the market performs well.
In addition, if you prefer a balanced approach for your investment, you can also choose Child Capital Guarantee Solutions. Under these plans, the amount you invest is completely safe, and you also have the opportunity to earn more if the market goes up, which will give you good returns.
These plans come with a life cover that is 10 times the annual premium to provide financial security to your child even in your absence. The best part about all these plans is that they come with a premium waiver option. This ensures that even after the unfortunate death of the policyholder, future premiums will be waived off and the premiums will be borne by the insurance company. The policy will continue as usual and the child will remain eligible to receive the fund value at maturity. Due to the life insurance facility, these plans also offer tax benefits up to Rs. 1.5 lakh under Section 80C.
