The birth of a little one is an occasion to celebrate for the family members but along with it comes added responsibility for the parents, which are not just mental or physical but also financial in nature. Each parent desires to give their little one bundle of joy along with the best possible upbringing apart from quality education and financial security. Today it is often found that after a child is born parents start planning out the for the child’s future.
Each one of us is responsible when it comes to our kids but, uncertainty is something that could collapse the financial health of a family at any point of time. Therefore, it is sensible to save good amount of money for your Childs future to keep them financially protected even in our absence.
Similar to your investments you do into a pension strategy or a policy for saving a lot of money through your retirement, you can easily program for your little one’s investment for their superior future. All kinds of youngster investment program brings along bundles of delight for the mother and father along with the little one.
You can give your little one a head start on a lifetime of economy by opening a savings account in his or her name. Usually opting for the incorrect savings vehicle for your child’s future cash could charge them thousands in times of avoidable taxes in addition to missed financial aid.
Often you might be hit with a question that whether child insurance plans good investment option to save for.
Always remember that investment in child’s future and education is a wise decision. There are several child insurance plans available in the market. And you will often find financial planners advising their clients to invest in child insurance plans.
In this 21st century financial planners believe that investment in accordance with insurance is a worst combination whereas, term life insurance policy along with Equity diversified mutual funds for your child’s future is great.
Equity diversified mutual funds are 4 star or 5 star rated funds that can provide you outstanding returns in the long-term. Child insurance plans are connected with high management fees and various other kinds of administrative charges.
As the management fee of mutual funds is quite low therefore, you can invest in mutual funds more in comparison to insurance plans. Therefore, it is advisable to opt for 4-star rated or else 5-star ranked Equity Diversified mutual funds and start investing as soon as possible.
Planning for your Childs future is very important. Among all the other expenses, education is the most important expense for your little one.
Mentioned below are the seven things when planning to invest for your child’s greater future:
- Invest Early – Investing early for your kid is very important. Remember, compound interest is a bigger force in this world. Therefore, if you start early the compound interest will work in support of you and help you grow. This will help you construct large corpus.
- Choose the right options – It is not enough when planning to invest. You also need to choose the right invest plan before investing. Consider your earnings and the amount you can set aside for your investment. Also consider the amount of time, risk involved, liquidity, Return on Investment, capital appreciation and many more. Try and avoid for investments that carry higher amount of risk.
- Opt for growth options – Choose 4-star rated or 5-star rated mutual funds that will help you to grow.
- Invest in Systematic Investment Plan (SIP) – Instead of investing lump sum on an irregular basis, it is advisable to put in small amounts but on a regular basis.
- Switch in time – Before you reach your goal, just three years prior to that you can shift your funds from equities to debt. This is only because during the last three years of your goal, your aim should be to protect the capital.
- Never mix insurance with investment – You should never opt for insurance products that provide your child’s financial future with various investments.
- Inflation adjusted future expenditure – Settle on your expenditure that would have been incurred in the future for different purposes such as education, marriage and so on. As these goals are of outlying future, you should always consider the impact of inflation.
Always include inflation as a significant factor when planning to invest and go for higher returns with low amount of risks. So, make your child’s future secure with wise investments.
Guest post from Steve Carry who is a financial planner cum special writer for Fisher Investments UK and has been advising people about their money management since 1994.
