As a perent, ensuring a secure financial future of our children is our top priority. To archive this goal, it's important to invest in best saving plan for child.
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According to the several source, the typical b-school have rise their fees around 400% more in recent year. Moreover, with an annual growth of 20%, an aspiring student must have at least 95 lakhs by the end of 2025, which is certainly a staggering amount compared to the middle class population of India.
Whether you are a new parent or have a child, this guide will help you make informed decisions to secure your child's financial future. in this article, i will explore best saving plan for children, design to provide financial growth, protection and support their dreams.
1. Unit Linked Investment Plan (ULIP):
ULIP (Unit Linked Investment Plan) is a unique savings and investment option that combines life insurance with market linked returns. ULIPs offer flexibility by allowing parents to switch between equity and debt funds based on market conditions and risk appetite. The investment component of ULIPs has the potential to give higher returns over the long term, making them suitable for a child's various financial goals.
2. Public Provident Fund (PPF):
Public Provident Fund (PPF) is one of India's most popular and trusted savings plans for children's future. It offers tax benefits under Section 80C of the Income Tax Act and the accrued interest is tax free. A PPF account has a lock-in period of 15 years, making it an ideal long-term investment option. Parents can open a PPF account in the child's name, which helps them build a large corpus to achieve various life goals.
3. Sukanya Samriddhi Yojana (SSY):
Sukanya Samriddhi Yojana is a government sponsored savings scheme designed specifically for girls. It offers an attractive interest rate and tax benefits. Parents or guardians can open an SSY account in the name of their daughter before the daughter turns ten. The account matures after 21 years or when the girl gets married after 18 years. This scheme provides financial security and support for the girl child's education, marriage or other future needs.
4. Recurring Deposite (RD) Account:
A Recurring Deposit (RD) account is a simple but effective savings plan where parents can deposit a fixed amount every month for a fixed period of time. RDs provide a guaranteed income and maturity benefit can be used for the child's education, marriage or other future expenses. They offer regular savings and can be opened at most banks in India.
5. Child Education Plan:
Several financial institutions offer special educational programs for children that are tailored to the educational needs of children. These plans offer a lump sum payment over a period or at certain intervals during the child's education. Children's curricula have the advantage of a corpus dedicated to educational expenses, which ensures that financial constraints do not hinder the child's learning opportunities.
6. Education Loan Insurance:
Although student loan insurance is not a traditional savings plan, it is an important component to consider when planning for your child's future. This acts as a safety net and ensures that in unexpected situations, such as the death of a parent, the child's student loan burden is taken care of Education loan insurance can be obtained through several insurance companies in India.
The Major Benefits of Saving Plan For Child:
- Secure Financial Security for future child.
- Offer attractuve tax deducation under 80C of Income Tax Act.
- Providing Long-Term Growth and Compounding of funds over time.
- This plan have a flexibity provide you can choose according to the your risk appetite.
- Design according to the children's financial requirements.
- This can be cost effective plan with low charge cost effective saving plan for child.
- archive you specific goal and onjective according to your child financial needs.
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FAQs (Frequently Asked Questions):
1. What is the best age to start a saving plan for my child?
The earlier you start, the better. It is advisable to begin a saving plan for your child as soon as they are born or in their early childhood. This allows more time for the invested funds to grow and accumulate, providing a stronger financial foundation for their future.
2. Are the returns from saving plans guaranteed?
It depends on the type of saving plan you choose. Traditional saving plans like PPF and RD offer guaranteed returns, while market-linked options like ULIPs are subject to market fluctuations and may not guarantee fixed returns. It's essential to understand the risk and return profile of the plan before making a decision.
3. Can I get tax benefits through child saving plans?
Yes, many child saving plans in India offer tax benefits under Section 80C of the Income Tax Act. PPF, SSY, and certain child education plans are eligible for tax deductions on the invested amount up to a specified limit.
4. Can I change the investment allocation in ULIPs as per changing market conditions?
Yes, one of the advantages of ULIPs is the flexibility to switch between different investment funds (equity, debt) based on market conditions and your risk tolerance. Some plans may offer a limited number of free switches per year.
5. What are the withdrawal rules for saving plans?
The withdrawal rules vary depending on the saving plan. For instance, PPF has a lock-in period of 15 years, and partial withdrawals are allowed after completion of five years. SSY has a maturity period of 21 years, and withdrawals can be made for specific purposes like education or marriage after the girl child turns 18. It's essential to familiarize yourself with the plan's terms and conditions regarding withdrawals.