Top 5 investment options to secure your children’s future

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The investment can have several objectives. It could be buying a house or a car or securing your children’s future so they can navigate easily throughout their lives. You have to start early while investing. It is also essential to diversify the investment taking into account the requirements of your children.

Here are the top 5 investment instruments that can help secure your children’s future.

Small savings plans

Small savings schemes such as Sukanya Sammriddhi Scheme (SSS), Public Provident Fund (PPF), National Savings Certificate (NSC), etc., can provide a decent long-term return while maintaining risk exposure at a Low level. Small savings plans offer a high level of security and a decent long-term return. You can choose a small savings plan in line with your children’s age and financial goals. For example, if you are planning to invest for the wedding of your daughter under 10, you can invest in the SSS. If you want to invest for a child’s higher education, you can diversify the investment into PPF, NSC and post office term deposits.

Equity Mutual Funds

Equity mutual funds can help you increase the return on investment of your child’s investment portfolio. Equity mutual funds can offer high returns, but at the same time, they come with higher risk. Thus, you can opt for equity funds to achieve long-term goals. SIP can be a good option to reduce risk and benefit from Rs cost averaging. While investing in a stock fund, diversify your investments across different mutual fund companies and different classes of stock funds. For example, you can invest in large caps for medium to long term goals and in small and mid cap funds for long term goals.

Recurring and fixed deposits

While investing for your children’s future, you should also focus on creating a provident fund that you can use to deal with financial emergencies related to your child. For example, you might need a provident fund to fill the funding gap when you take out a student loan, to pay medical bills in case of a medical emergency, and a cashless insurance claim n is not available and for many such situations. You can invest in fixed deposits to maintain the provident fund. If you plan to gradually create a provident fund in the next few years, you can invest in bank R&D. Currently, the bank’s deposit interest rate is on the rise, so you can choose an FD with a shorter maturity or opt for a laddered FD. RD or FD can offer you a high level of liquidity essential for the management of the provident fund.

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Investing in Gold Sovereign Bonds (SGB)

Over the past few years, gold has proven to be one of the best inflation hedges. You can invest in gold through SGB as they offer you around 2.5% interest per annum on face value and capital appreciation. To invest via the SIP mode, you can invest in Gold ETFs.

Invest in ULIP

You can invest in the unit-linked investment plan (ULIP) while choosing the allocation in the debt and equity part in synchronization with the risk appetite and the return requirement. ULIP also offers life insurance benefits and u/s 80C tax deduction benefits. ULIP can be a perfect option for long-term investors looking for multiple benefits in a single investment product.

Things to keep in mind

The choice of investment product for your child’s future depends on their age and life goals. The investment portfolio should be reviewed regularly and adjusted according to factors such as inflation, change in objective, risk appetite, etc.

Adhil Shetty, CEO of Bankbazaar.com, says, “When it comes to securing your children’s future, you need to structure your investments with your financial goals in mind like their education, marriage, etc. . It’s wise to start taking small steps toward these goals now. to avoid financial stress later. You can break your goals down into small monthly steps that you will need to repeat for many years. These steps are basically mutual fund SIPs. Index fund SIPs are also a great way to earn long-term market-linked returns, helping you achieve tough goals like building your child’s college fund. You can choose equity funds based on your goals and risk appetite. You can also diversify into bonds as you get closer to the goal. Remember to estimate inflation when investing for a long-term goal. »

Children’s investment portfolios should be sufficiently diversified, and if you need help planning an investment for your child, do not hesitate to seek the assistance of a registered investment advisor.

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