Securing Your Child’s Future: Exploring the Best One-Time Investment Plans for Children
Introduction
Being a parent means providing for your children now and in the future. You must plan for your child’s financial future, considering educational expenses, marriage, and aspirations. With increasing inflation rates, your savings will not be enough to cover all these expenses in the future. That is why you must invest in smart childcare plans to secure your child’s future. However, the right time to invest with a lifetime free demat account for your child’s future is now, and this blog gives you the best plans!
What is a One-Time Child Investment Plan?
The one-time investment plans require you to pay a lump-sum investment once through the policy term. Many of these plans are insurance plans that offer life coverage. Such plans will keep you financially prepared and help your child meet their milestones without any worry. Some of the key advantages of investing in such plans are:
- Grow money without a burden – When you make lump-sum investments in equity, debt, or balanced mutual funds, they offer returns that beat inflation in the future. This protects your future investments.
- Ensure security- Plans with life cover ensure financial security for your child, even in case of unfortunate events.
- Leverage wealth boosters – Some plans offer wealth booster benefits that add to your savings. Just staying invested in such plans will boost your returns through compounding.
- Easy access to money – You can partially withdraw depending on your chosen plans. It helps you to meet your child’s expenses in the near future.
- Tax benefits – Many childcare investment plans offer tax benefits through tax deductions. Your contributions to such investment plans are subject to income tax deductions under Section 80C.
Many insurance and investment providers offer investment plans coupled with insurance benefits. This protects the plan even if the proposer passes away during the policy period. Such protection is crucial to ensure the financial wellness of your child even when you are not around.
Top Picks for Best One-Time Investment Plan for Child
While many investment plans allow for a single payment, you can also make monthly contributions to the plan based on your budget. If you have a lump-sum cash, you can choose an investment plan and let the money grow for 10 to 20 years based on your child’s age. You can also choose to invest in fixed instalments to continue to build wealth. Choosing an investment platform with a free demat account with no annual charges will help you save investment costs. Some of the popular investment plans to secure your child’s future are:
Sukanya Samriddi Yojana (SSY)
SSY is a government scheme exclusively created for the protection of girl children. You can open an SSY account in any post office before your girl turns 10. The minimum deposit in this scheme is Rs. 1000. You can also invest annually, and the maximum cap is Rs. 1.5 lakh per year. You only need to make deposits until the girl reaches 14, and the maturity period is 21 years. The government fixes the annual interest rate, and partial withdrawals are allowed once the child reaches 18.
Unit Linked Insurance Plans (ULIPs)
Many insurance providers offer ULIP plans that are ideal for low-risk investors. With an average return of 4% to 6%, it combines the benefits of investment and insurance. You can pay insurance premiums based on your schedule. This plan is suitable to meet your child’s education or marriage expenses. If the proposer (parent of the child) passes away before maturity, the child can still receive a lump sum benefit despite not making regular premium contributions.
Mutual Funds
Equity mutual funds offer excellent benefits if you want to beat inflation and build a healthy corpus in the next 10 to 20 years. You can invest a lump-sum amount or periodically using a Systematic Investment Plan (SIP). Aggressive investors can invest in pure equity funds. You can invest in hybrid or balanced funds that distribute risks in equity and debt options to balance risk and rewards. It combines growth potential and risk management to protect your child’s future.
Public Provident Fund (PPF)
PPF is also a good investment option to build a healthy corpus in the next 15 years. This type of investment has a lock-in period of 15 years, and a PPF account can be opened with any post office or bank. You can invest around Rs. 1 lakh annually with an average interest rate of 8.75%.
Fixed Deposits (FDs)
Fixed deposits in the child’s name are also a great investment option for risk-averse investors. While it offers capital protection, the returns are modest. You can lock in the investment for a specific period, after which you can get your principal back, along with accrued interest.
Conclusion
Apart from the above schemes, you can also invest in gold and real estate for your children. Several policies are tailor-made for children to support their education and aspirations. You can also find plans exclusively created for girl children with top financial institutions. With child investment plans, the earlier you start, the better. Staying invested for a longer period results in compounded growth. To start investing, explore trading apps with zero brokerage to find the right investment plan.
FAQs
- Are one-time investment plans suitable for children?
Yes, the one-time investment plans offer convenience and the potential for higher returns based on your investment avenue. The long-term investment growth will be sufficient to meet the future financial needs of your children.
- How can I choose the best investment plan for my child?
The best investment plan varies with every individual. Consider your child’s age before looking for an investment plan. Compare plans based on your risk tolerance and investment horizon to maximise the returns.
- Are there risks associated with one-time investment plans?
If you choose to invest in plans linked to equity markets, there are risks, but they offer better yields. On the other hand, insurance-based plans offer protection with a lower risk. Every plan carries some market risks. Understand the risks involved before choosing an investment option.
