All parents want to give the best to their child, whether it be education or moral values. Apart from this giving a secure financial future is also a dream to all parents for which they work hard for their entire life. But all their hard work can go in vain if not for proper planning and execution.
Here a question arises how you need to plan for your children’s future? Where to invest so that they can get maximum returns and have a secured future.
How to start with?
Be an early bird
The first and the most important thing which you need is to have a clearly defined goal. And the second obvious solution is to start saving early.
The most important thing which your child needs is a good education. Hence, if you start planning your finances early it’s quite possible that your kid will get the best education at the best education centre.
Another advantage of doing this is you will not only be able to amass a larger sum, but you will also gain from the power of compounding.
Where to invest to achieve this?
It’s not a joke that you can gather up to 1 crore when invested early. This is possible by starting SIP of ₹9000 yearly for a time period of 18 years. Investments like this help your kid to get the best higher education. Investing in your kid’s education is again one of the best investments which pay lifelong for your kids.
Choose the right option
An early start isn’t enough when you don’t choose the right investment path.
Many parents start saving money for their child’s future in their savings account only. But do you think this will yield enough returns? Obviously not! A bank savings account gives you a maximum return up to 6-7% only, sad but true, that it will not be enough for the financially secured future of your loved ones.
Where to Invest?
Traditional life insurance policies are something that offers very low yields of 5-6 per cent. The returns are low but it indeed provides a cover to your loved ones when you are not there. Another advantage of having a life insurance policy is that the returns are assured and tax-free.
But if you want a financially bright future for your kid then you need to do a lot more than investing in a life insurance plan.
Equity mutual funds
Investing in equity mutual funds is a long term investment portfolio which has delivered average annualized returns of 16.5 per cent in the past 10 years. Since the funds are professionally managed you don’t need to take any tension. What makes it disappointing is the risk factor involved.
Taking risk is not which everyone can afford and hence they want something which offers sure returns.
However, if you have 15-18 years left before your child starts college, equity mutual funds can give you the best returns which can further give a bright future to your kid, as through your investments will be able to provide the best education to your kid.
Opening a children’s savings account with a bank can be good to invest for yours. Doing this not only keeps your money safe but also gives you sure returns. Generally, there’s no tax to pay on these accounts, but the annual interest on these accounts can be taxable.
Opt for save options such as PPF and fixed deposits
These options are best to keep your money secure and earn returns on the same hand. Bank deposits are tax-inefficient, and if you are in the 30 per cent tax bracket, go for income funds. But still, FD and bank PPF accounts are a good option which gives you almost 7-8% interest annually. You can start this with short term goals and you can again go for the deposit when the tenure is over and you get the returns. After all these investments are done you can also invest in real estate, doing this will not only give you a secure future but will act the same for your kids.
Remember, for better results try to have a balanced portfolio and try to go for tax-efficient plans.