Your child?s future is the most important responsibility of life
Posted by aartis on September 17th, 2016
Your child is one of the greatest responsibility of your life. It’s about giving the best of the amenities to your child at least unitil he or she is capable of earning money and shaping up career. So it becomes one of the most important goals of parents also because of the tough environment and high expenses involved. Although parents do start saving money right from the childhood, the little amount proves insufficient in front of the rising costs of education, career prospects and other lifestyle amenities. Therefore, investing in any good child plan would be one of the best ways to provide financial security to your children.
There are lots of of companies in India who have introduced child plans and other products for children. However, child savings plan offered by insurance companies provides various features like waiver of premium, returns at regular intervals or the end of the tenure. These are plans where a part of the premium goes for insurance cover and the remaining is invested in market based funds like equity, debt or balanced funds. Planning for Child’s future is quite an important task and needs a financial expert advice for better returns:
So, here are a few tips to consider while working upon buying an effective child plans:
Every child has its own choices. They want to become something in life, such as doctor, pilot, cricketer or musician. Therefore, understanding your child needs you should plan for a target date when he or she will require money. So, if you consider an average age of child for choosing their career options, it will be post 21 or 22 years. You should plan a target date of around 25 years to get returns at regular intervals.
Once you decide the target date, the next step would be determining the cost considering factors like lifestyle needs and inflation costs till the time your child pursue higher studies. Ideally, MBA, engineering, aviation, doctorate are some of the courses that most children prefer as career options. So, the amount required to pursue these career options in the near future would be important to decide upon.
Fund Charges & Monitoring
Once you choose the target date and amount, you will opt for child plan. There would be charges associated with it such as administrative, managements, upfront, partial withdraw, fund switching or surrender charges associated with the plan. Ensure that your charges should not eat up most of your earning. Your saving plans should have minimum charges and provide flexibility in terms of cash withdrawal, bonus receipt and term of the policy. Secondly, since these are market-linked funds its important you have proper monitoring on funds time-on-time. If there is any sort of problem, consult your financial expert for re-balancing your fund portfolio.
It is always better to start your child plans early, as you can experiment with the funds very well and produce a desired result. Secondly, your funds get the benefits of compounding effect. The biggest advantage is, if there are any losses you have proper recovery time. When you near the end of the goal, you should withdraw the riskier funds and start investing in safer products, so that you don’t get surprise drop at the end. It is advisable, never enforce children to adapt career options as per plan returns. Let him or her decide upon what they want to do. A successful child plan won’t make any sense if they are unable to pursue things they are passionate about.
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