How Can I Invest On Behalf Of A Child?
Published On Jul 27, 2021 4:00 PM By InsuranceDekho
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Being a parent comes with many responsibilities. One of the huge responsibilities one can think of is saving for their child’s future. There are many ways to invest and save for a child’s future. The best way to save for their child is to invest in a child plan.
A child plan is an insurance as well as an investment plan which ensures that the child whose behalf the plan is taken is always financially secured. Another way to invest is through the term and mutual funds. A few other ways are
Top 5 Ways To Invest For a Child
It is important to choose a legit and suitable investment option considering all the aspects of the life assured. Some such options to choose from are listed below.
When the plan matures, the life assured receives a lump sum amount that can be used to pay the child’s college fees or marriage expenses. In case of the death of the parent or guardian of the child, the expenses of the child are taken care of.
Advantages Of A Child Plan
A child plan provides the following advantages/ benefits:
- Helps in fulfilling the child’s goals
- Helps financially in unforeseen situations
- Maturity benefit to pay for the child’s education or marriage
- Partial Withdrawals
- Funds Fees
- Avoids loss of capital
- Income Tax Benefits
Requirements for Investing in A Child Plan
To be able to invest in a child plan the following requirements must be met.
- The person investing on behalf of the minor must be the child’s legal guardian or a parent.
- A birth certificate or a passport with the parents or the guardian’s name on it.
- A proof of the child’s age
- The relationship between the guardian and the child must be proven
A mutual fund is a form of investment instrument that consists of a stock, bond, or other security portfolios. They provide low-cost access to diversified, professionally managed portfolios for small and individual investors. It pools money from different participants and the gains and the losses are divided among the stakeholders. Potential money managers manage mutual funds, allocating assets and attempting to generate capital gains or income for the investors.
A Gold ETF(Exchange-Traded Fund) tracks the domestic and physical gold price. The investment is based on terms of gold bullion. They are passive investment options. For the investors in need of high liquidity, Gold ETF works without a hassle. This can be bought by having a Demat account. This is for the investors to have an option to invest in them as SIPs.
Some advantages of investing in this are:-
- The denomination is very small.
- The cost is efficient.
- Provides liquidity.
- There is no risk or theft involved.
- Purity is assured.
The Public Provident Fund(PPF) was introduced by the National Savings Institute of the Ministry of Finance in 1968. It is a savings-cum-tax-saving instrument. It offers an investment with reasonable returns to mobilize small savings. The returns are combined with tax benefits. Being one of the most popular long-term saving schemes, it focuses on introducing small savings like investments and providing good returns with tax benefits.
A stock tells us who the owner of a fraction of a corporation is. Stock’s units are in shares. This tells us who the owner of a particular proportion of the company is. It is a safe way to invest and grow money in a short span for the future of a child. While investing in stocks it is important to know your risk horizon.
One of the most important responsibilities of being a parent is to invest and save for the future of the child. For the child to be financially stable, even when there is nobody around, a parent must invest in effective saving options like a child plan, mutual funds, PPF or FD, and stocks. Investing can promote self-dependency in the child and can be used to fulfill their short and long-term goals.
Importance of Child Insurance Plan
How Does a Child Insurance Plan Work?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.