Everyone has dream about their children education and future. Most of the parents dream to provide quality education to their children. Due to high inflation, the cost of education is increasing year on year and this should not end up as a dream. But picking up a right investment for child planning would be difficult as there are too many varieties of products available and it is becoming difficult to select the right product.
4 Best investments for the child future and education
1) Insurance Plans: There are various children insurance plans available which covers risk coverage for the parents. The insurance plans should be taken on earning parents. The plans selected should provide long term advantage to the children. There are number of Insurance plans offered by LIC, HDFC and other insurance players.
2) ULIP’s : Unit linked insurance plans provide better returns than a fixed deposit or comparing to a normal insurance plans. The insurance provider allocate units (similar to mutual fund units) at a specific price and the they invest such money in high yielding stocks/mutual funds. Higher returns expected in such ULIP’s. There are various insurance companies which are offering ULIP’s. Based on the time period and the insurance value, one can choose the best plan suitable for them.
3) Mutual Funds : Another alternative is to invest the amount in high performing mutual funds. You can refer my post on “picking up right mutual fund” on how to choose a good fund. Average returns received in the last 10 years are 18%+ per annum which are almost twice the returns compared to bank fixed deposit. If a parent invests Rs.3,000 per month in Mutual fund SIP (Systematic investment plan), the amount received after 22 years is Rs.one Crore. Unbelievable right ? This is one of the best bet on creating a wealth for the children
4) Public Provident Fund (PPF): Investing in PPF is another alternative investment available. Currently, PPF account is offered by Post office and State Bank of India. This account has a lock-in period for 15 years. The minimum investment would be Rs.500 and max of Rs.1,00,000. The rate of interest is decided by Government of India on yearly basis and currently (effective from 1-Apr-12) it is 8.8% per annum. PPF account has received 9% interest rate earlier when banks were offering 7 to 7.5%, hence on long term we would be getting higher returns on PPF compared to bank fixed deposits. The investment is 100% safe as the investments are done with Government of India.
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