ARTICLES

Children’s Day is right around the corner and as you gear up to buy gifts for your child or indulge them in a day out, think about actually gifting something worthwhile. Rather than spending your money on fancy clothes, toys, or trips, how about securing the future of your child?

While most of us save for our child’s future, we might fail to accumulate the desired corpus. For example, if you have created a fixed deposit for your child, will the deposit yield sufficient returns to fund your child’s higher education? Or if parents are investing for their child regularly, what would happen in the case of premature death of parents?

If you seek the right answers to these questions, you can secure your child’s future, successfully. So, what should be the right answers?

The concept of Financial Security

Financial security means knowing that your child would have access to an optimal corpus that would help him/her fulfill their dreams of a good education and career. 

How do you provide this financial security? Here are two ways of doing it:

Children’s Gift Funds

Children’s Gift Funds are hybrid mutual fund schemes with the objective to create a corpus for children. These schemes invest in a mix of equity and debt to give the best of both worlds – i.e. equity growth and debt stability. Moreover, since the portfolio is diversified and expertly managed, Parents can create a good corpus for their children. Investments in these funds can be done either in a lump sum or through SIPs. This will accumulate a considerable corpus with time.

Child Insurance Plans

Child insurance plans are life insurance policies that aim to create a corpus for a child’s future. These plans either insure the parent or the child. In either case, the parent is the policyholder responsible for paying the premium. Child plans, usually, have the premium waiver benefit. This benefit guarantees the continuity of the policy even if the parent dies. On the death of the parent, the premiums are waived off and paid by the insurer itself. The plan continues up to the selected tenure and on maturity, a maturity corpus is paid. This corpus helps the child meet its financial needs easily.

So, child insurance plans provide financial security even in the absence of the parent and prove to be a good addition to the portfolio.

So, this Children’s Day, choose the concept of financial security for your child and gift them the promise of a secured financial future. These investment avenues would create a corpus for your child so that whatever his/her dream, he/she can fulfil it without any hiccups.

Disclaimer: Investment in securities and other investment products is subject to market risks; read all the related terms and documents carefully before investing.