Most people start financial planning for their children when they are mere kids. The insurance companies thus have come up with child education plan and unit-linked insurance plans that are sought after by most of the parents these days. These plans do offer insurance and safety for your child’s education, but in most cases, the returns are meagre or poor. If the expense is deducted that is associated with the child’s plans the yields are reduced.
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So if you want to secure the future of your child’s education or expenses in case of sudden demise of the guardian, it is better to go for an acceptable vanilla term insurance plan that takes care of each and everything.
Some of the best investment for child education plans are mentioned below –
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By far the best scheme to invest, to build a substantial corpus for your child. The plan is beneficial for a number of reasons. A 15-year scheme where you can make the future slowly for your child’s education plans. The present interest rate is 7.6 percent, and it beats the interest rates of many banks, which are at 7 percent. With the bond yield rising and the RBI hiking the interest rates, the interest rate of this scheme may be revised soon. The earned interest is exempted from tax in the hands of the investors. Additionally, you get a tax rebate of up to Rs 1.5 lakhs under the Income Tax Act.
Sukanya Samriddhi Account–
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Another good scheme to invest that can help you build a corpus for your child’s education. The Sukanya Samriddhi Account offers an interest rate of 8.1 percent which is entirely tax-free. Though there is a tax benefit provided under the income tax act, one should be careful that this scheme is for the girl child only. In the case of a girl child, this plan is beneficial to save for her marriage or her education. Maybe the problem with this plan is that the interest rates could be revised from time to time. The interest rates are higher than banks, which acts as a big positive.
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Gold is considered to be an asset where you can invest for your child. But it is better not to do it through physical gold. The better way would be gold ETFs because there is no storage and charges. Since it can be invested in the electronic form, there is no worry of theft.
It is better to invest in small amounts each month and then build a sizeable one. It is to be noted that gold has generated better returns than most assets in the more long term. The primary disadvantage is that capital gains tax is needed to be paid when you sell. Though the risk of fall in the gold prices remains a worry, over a period of time, it has always outperformed.
There are many child investment plans are mentioned above but it advisable that you check the one that suits the best depending on the tenure and your ability to save Some of the schemes have no tax liability and also offer you a tax benefit. It is to be remembered that once you have invested in a plan, it would be difficult to spend on a new one altogether.