Tuesday, 13 October 2020

What is Children Education Planning? Know in Details

Children's education being important in financial goals in any family structure is also an emotion which most investment products are sold on. So while you walk into the theater or watching some advertisements on the tv you might be nothing however pron to look at content which makes you in all probability hit a call where you will decide to invest in a particular product for my child's future.


There are various products in the market that you might think are suitable for investing in your child's future it could be a fixed deposit, it could be a PPF, it might be ELSS, it might be the Sukanya Samrudhi Scheme or another authorities choices a recurring deposit.


Are Children’s plans worth investing in?

Our money back plans, traditional plans, endowment plans or children plans good for investment?


Answer is NO reason being that the money-back plans to offer you very low returns over the period of time that you are investing which is usually over 10 years and upwards and in addition the life masking such insurance policies are very low.


Coming to the products that are known as children's plans or baby plans they're nothing however product peddled to us by insurance coverage brokers or others the place your money is locked in for a period of time. These products may work for individuals who do not have the self-discipline of investing or they cannot handle their cash with the assistance of a financial advisor.


Here is a serious suggestion for you would be not to fall on to the trap of these money-back policies, endowment policies, or children's plans. Because they in all probability not taking you any nearer however really moreover away from their kid's monetary purpose.


Where do we invest?

A combination would probably be investing in a mutual fund and also on the side purchasing a term insurance plan. When it comes to investing in a mutual fund we often know what is the goal we are heading towards?.


So for an individual who's a baby is said four years previous their monetary objectives at present arising in about 14 years time.


If suppose the kid is 10 years previous then their child's monetary purpose is arising in eight years time and therefore each of them must in all probability make investments different amounts and have to invest in probably different products. completely different quantities and must spend money on in all probability completely different products.


PPF

Public Provident Fund is the best plan to invest for several reasons. This is a 15-year plan, where you can build a large corpus for your child's education. The current rate of 8.1 percent so far is much higher than the 7 percent interest rate offered by banks. Interest earned by investors is completely tax-free. Apart from this, under Section 80C of the Income Tax Act, you get an exemption of up to Rs 1.5 lakh in tax. Overall this is a very attractive investment plan. This is probably the best way to build a fund for your child.


Gold Saving

Saving Gold You can invest in gold for a better future for your child. But do not do this through physical gold. The best choice can be gold etf as there isn't a locker or different storage prices of any type aside from this it's also possible to put money into digital kind the place there isn't a fear of theft.


You can invest small amounts every month and thus accumulate a large fund gradually. Gold gives better returns in the long run than other asset classes. So, generally in a period of 10–15 years gold can earn good profits. One disadvantage of this investment is that while selling you have to pay capital gains tax which is mandatory.


Equity Mutual Funds

Equity mutual fund is another choice the place you may make good money. These mutual funds have proved their utility in terms of long-term profits. For example, many equity mutual funds offer far more than the profits from bank deposits. So, if you are a long-term investor, you will get different benefits from them. If you want to save your children's education or other such schemes then this is the most effective solution.


Debt Mutual Funds

Some debt mutual funds offer better profits than deposits in a bank. These mutual funds also offer tax benefits which makes them a better option than bank deposits, however, if you are planning to invest for a child then it is most important to secure any option. Choose this option only if you are planning to invest for a long period because they give good returns only after a long period. You should consult a professional before investing in these schemes as these investments can also be a bit risky.


Bank deposits

This should probably be the final bet of your investment plan as this option offers the lowest interest rate. For example, if you invest in it now, for the next 10 years you will get interest at the rate of only 7%. Also, once you invest in it, and the interest rates increase, you will withdraw this amount in the middle period and deposit it in another place where the interest rate is higher.


There may be your loss in this, as some payment has to be made after withdrawing the pre-mature amount from banks. Significantly, you will have to pay tax on your deposit there and it can reduce your tax liability if you are already paying tax.


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