Investment Tips To Secure your Childs Future
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World Students’ Day is celebrated every year on October 15 in honour of one of the world’s greatest physicist, aeronautical engineer and statesman, as well as India’s most-loved President ever, Dr. A.P.J. Abdul Kalam. In 2010, the United Nations declared October 15, which is Dr. Kalam’s birthday, as World Students’ Day to honour his contribution to scientific research and his love for students and education.
Every parent dreams that their children become toppers and famous scientists like Dr. Kalam. They want to give them the best of everything in life, including lifestyle, healthcare and education. But with the growing cost of living and more importantly the steep rise in the cost of higher education, it’s becoming increasingly difficult for parents to provide good education to their children.
HIGHER EDUCATION COSTS IN INDIA
RISING BY 10-12% PER YEAR
If you never started investment plans for your child or were late in saving for his/ her future, you will not have enough to pay for their higher education. Your only recourse may be to go for an expensive education loan and put the burden of debt on their shoulders even before they start earning.
You can avoid this situation by making a timely investment in a Child Plan and save for your children’s higher education. Bajaj Allianz ULIPs available on Bajaj Markets allows you to save for your child’s future by investing in top-rated funds with returns as high as up to 25% over a 5-year period.
Learn how you can stay on track with your investment plan and save for your children’s future with these 5 practical investment tips.
5 Practical Investment Tips to Save for Your Children’s Future
Start early
Starting a Child Plan early helps you take advantage of the law of compounding and helps you save a substantial amount for your child’s future. A simple mathematical example illustrates why starting an investment plan for your child early is so important.
Say, if you start investing in ULIPs while he is at the age of 5. When your son reaches 25, you will have a corpus of approximately Rs. 3 crore by investing Rs. 5000 per month with 12% annualised returns. In case you want to wait and start investing only when your son reaches 10 years of age, your final corpus will come down to 1.5 crore.
While it’s laudable to do your part to safeguard your childrens’ future, inculcating in them the right financial principles is also paramount, since you won’t always be around to help them make crucial financial decisions. Student investment opportunities are aplenty these days, so feed them the right financial advice to give their investment goals a much needed jump-start.
Invest in the right tool
It doesn’t make sense to invest in a fixed deposit or traditional life insurance for your children’s higher education because it provides low returns. However, Unit linked insurance plans give you flexibility to invest in a variety of funds depending upon your risk appetite, investment horizon and financial goals.
ULIPs also allow you to switch funds, add top ups and diversify risks while you keep on building your corpus with a long-term outlook.
Review your portfolio
It’s important to review your portfolio during important life events such as when your child reaches a particular age. This is where again the flexibility of a Child Plan such as Bajaj Allianz ULIPs, helps you diversify your portfolio.
If you have less time left to save and your portfolio has not given the yield as expected, you can switch to more aggressive equity-based funds for higher returns. Some of plans even allow unlimited free switches so that you can keep on reviewing and tweaking the investment plan for your child through the policy tenure.
Save first, spend later
This is a no-brainer yet so hard to follow for parents or any human being on this planet, especially since departmental stores and e-commerce bargain deals invaded our lives. If you spend your money first and then think about saving later, you’ll probably have nothing left.
This is also where we understand the importance of sticking to a budget and making investment plans for your child. If you have invested in a ULIP plan for your child, utilize auto debit so that the premium amount is deducted from your salary as soon as it’s credited. Even if you are not paying monthly premiums, you can arrange for a specific sum of money to be transferred to another account for the premium money.
Unless you make this a habit, it may be difficult for you to continue with the investment plan. Always remember the golden rule of save first and spend later.
Invest in a ULIP with the lowest cost structure
It’s important to understand that the entire premium that you pay in a ULIP plan is not invested in a fund. While a portion of the premium goes for life insurance protection, there are other charges such as allocation charge, mortality charge, fund management charge etc. that are deducted from the remaining amount. Therefore, it’s important that you look for a Unit linked insurance plan with the lowest cost structure. It will ensure that your investment is optimized and you have a substantial corpus on maturity. ULIP plans available on Bajaj Markets have one of the lowest cost structures with zero allocation charges and return of mortality charges. It also offers loyalty additions and returns enhancers to further increase your savings.
Following these tips and honing your knack for saving and investing goes a long way towards shaping a bright future for your child, with plentiful opportunities in store. But remember: ensuring your child develops an acute knack for investing, too, is equally important. Relay your financial acumen to them and explore the various student investment opportunities available. The promising future will follow.
Also read in detail about the ULIP tax benefits you can avail with various investment plans available on Bajaj Markets
To know more on ULIP investments in depth, you can check out these blogs:
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