Once you are a parent, your child becomes the world to you. From the moment you open your eyes in the morning, till the time you go to bed, all that you think and do is for your little one. We do everything possible to keep them safe and happy, don’t we? While we take all the steps that we think are best for them, we also must consider some child investment plans. These plans can help you as well as them to have enough money for their higher studies and wedding. So, let us take a look at some of the best options available.
Child Insurance Plans
This is certainly one of the best long-term investment plans for a child in India. The child insurance plans work both as investment and insurance which help in securing the future of the children on the early demise of their parents. In these plans, a part of the premium is invested so that the above-average returns are generated, which are paid during the time of maturity.
Fixed Deposits (FD) is one of the most popular investments plans which people have been using for a long time. FD is considered to be one of the most secured investment options which come with a fixed rate of return that ranges from 3% to 6.5% per annum. At the end of the tenure, the capital amount along with the interest can be withdrawn. However, the only drawback of this investment option is that you cannot opt for an early withdrawal.
Unit Linked Insurance Plan (ULIP)
These plans are perfect for individuals who look for returns over investments and insurance protection. You can get better returns from ULIPs as compared to the other traditional types of investing. Investment through ULIP helps in beating inflation as well as saving money for the future of the children. Since one part of the premium paid is an investment in funds that are operated in the capital market, the chances of generating better returns are more. Apart from this, on your untimely demise, your family can get the life insurance settlement payout. These plans are a part of the equity markets; therefore, the rate of return is much more than the other types of insurance. The rate of returns that you can expect is around 8%-10%.
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Stocks & Mutual Funds
Stocks and mutual funds are considered to be very risky. However, the returns you get from investing in stocks and mutual funds are higher than many other options. You may either invest in stocks or choose a SIP in mutual funds for a long-term investment for your child. Investing in stocks and mutual funds is more like putting a fixed amount of money in a savings account for a certain period till the time it reaches a particular target. As we talk about the long run, investments in mutual funds bring a very good return after a certain period, which ranges from 12% to 16%. If the economy is in a good state, you can even expect a return of 20% to 30%. You can choose from several options such as small-cap, mid-cap, large-cap, debt funds, and many more.
Term insurance is one of the investment options in which you put money for a certain period. However, if you survive through the period, you will not get any return. If you pass away within the term insurance tenure, the beneficiary of the policy will get the sum assured. Depending upon the kind of term insurance plan you are buying, the nominees of the policy may even get up to INR 1 Crore or more as a sum assured.
To know more about the investment options available in the country, you can visit the website of IIFL. You can compare the options and choose the one that is best suited for you.