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Child Investment Plans in 2024

Best Investment Plans for child can help every parent to secure their child’s financial future. As a parent, some crucial milestones you must plan for include your child’s education, marriage, and other aspirations, such as starting their own business. ...Read More

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Child Investment Plans in 2024
Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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What are Some of the Best Children Investment Plans for Your Child?

The best children investment plans for kids offer a perfect mix of security, potential growth and flexibility. Based on these factors, are criteria that parents can keep in mind while selecting the best child investment plans:    

  • Opt for plans offered by reputable financial institutions or government-backed schemes to ensure the safety of the investment.

  • Choose investment options with the potential for long-term capital appreciation. Instruments that have historically performed well always work. 

  • It works to go for investment options with a tax benefit.

  • Select plans that allow flexibility in terms of contribution amounts and withdrawal options. This helps you as a parent/ guardian to adapt your investment to the changing financial needs. 

  • It is essential to focus on education plans that align with your child's academic aspirations. These may feature scholarships or dedicated payouts as per your child's educational milestones.

  • Be mindful of any associated costs or fees, and opt for low-cost options for better returns. 

  • Do consider plans that feature an insurance component for that additional layer of financial security for your child's future.

11 Best Child Investment Plans Options

Parents try their level best to provide financial stability for their children. They do not want their children to let go of the best education and career opportunities for want of funds. Financial planning is crucial to achieve this aspiration. Several options for investment towards children in India are available to choose from, and they are:

1

Unit-Linked Insurance Plans (ULIPs)

ULIPs are unique financial tools that combine the benefits of life insurance coverage with investment. They offer the dual advantage of market-linked returns along with life cover. As an investor, you can control how your funds get allocated across various asset classes. So, you can invest based on your risk appetite while enjoying market-linked returns. ULIPs are a popular choice for that seeking long-term wealth creation, making them a valuable consideration for securing your child’s financial future.

2

Life Insurance

Along with providing financial protection in difficult situations, life insurance plans can function as a potent investment tool. Policies such as endowment plans offer financial security in case of unforeseen events while ensuring disciplined savings over the policy term. You can customise these plans to meet specific financial goals, including financing your child’s higher education abroad or saving for their marriage.

3

Systematic Investment Plans (SIPs)

SIPs are a systematic and disciplined way to invest in mutual funds. They are particularly suitable for those who may not have a lump sum amount to invest upfront. SIPs allow you to invest a fixed amount at regular intervals, ensuring the benefit of rupee-cost averaging and potentially high returns over the long term.

4

Fixed or Recurring Deposits

Traditional yet reliable, fixed and recurring deposits are low-risk options for child investment. They offer a fixed interest rate, ensuring stability in returns. While the returns may not be as high as some market-linked instruments, the safety and predictability make them a preferred choice for risk-averse investors.

5

Sukanya Samriddhi Yojana

Specifically designed for the girl child, the Sukanya Samriddhi Yojana is a government-backed savings scheme. There are tax benefits with Sukanya Samriddhi Yojana. This long-term investment ensures financial security for a girl child’s education and marriage.

6

Gold

Gold has been a timeless investment avenue in India. Many relatives gift newborns gold coins, jewellery and bullion as an investment. Gold is a tangible asset that allows quick liquidation during emergencies. Although the price fluctuates, it is not linked to market ups and downs, making it a reliable investment when the market performs poorly. Gold offers stability during economic certainties, making it a valuable addition to a diversified portfolio.

7

Public Provident Fund (PPF)

PPF is a long-term, government-backed savings scheme that provides attractive tax benefits. With a lock-in period of 15 years, PPF encourages disciplined savings and can be an effective tool for building a substantial corpus for your child’s future needs.

8

Bonds

Bonds invest in fixed-income instruments like government securities and bonds. While they offer lower risk than equity-based investments, they still provide better returns than traditional fixed deposits. Debt funds work best for conservative investors looking to balance risk and return.

9

Real Estate

Investing in real estate can be a long-term strategy for building wealth. While it may not be as liquid as other investments, property values tend to appreciate over time, offering a potential source of funds for your child’s future endeavours.

10

Mutual Funds

Mutual fund dealers allow you to compare the funds based on different metrics, such as level of risk, return, and price. Also, as the information is easily accessible, the investor will be able to make wise decisions. Besides, Mutual Funds offer benefits in liquidity and professional management.

11

Debt Funds

A debt fund is a fund scheme that is more inclined towards investing in securities that offer capital appreciation, like government bonds/corporate bonds, treasury bills, money market instruments, etc. Debt funds provide fixed income and are also referred to as fixed-income funds or bond funds. It may be considered while investing   for child.

Debt funds are ideal for individuals who are averse to risk. They offer stable returns, have comparatively high liquidity and are reasonably safe. These are better options than fixed deposits as they provide higher returns and achieve your financial goals in a tax-efficient manner.

Reasons to Invest in Child Investment Plans

Providing financial stability for your children is the primary reason to invest in child investment plans. The other reasons that make the investment crucial are:

  • Rising Education Costs

    Education is the cornerstone of a successful future. As education costs rise consistently, early investment allows you to provide your child with the best possible educational opportunities without compromising quality due to financial constraints.

  • Financial Security

    Life is unpredictable, so you must ensure financial security for your child in case of any unforeseen circumstances. Investment options with an insurance component act as a safety net, guaranteeing financial support during difficult times.

  • Inflation Hedge

    Inflation erodes the purchasing power of money over time. By investing, you combat the impact of inflation, ensuring that the funds you set aside today will be sufficient to meet your child’s future financial needs.

  • Goal-Specific Planning

    Investing allows you to set and achieve specific financial goals for your child. Strategic planning ensures you have the funds to fulfil their educational, marriage and other life dreams.

  • Compounding Benefits

    The earlier you start investing, the longer your money has to grow. Most investments use the power of compounding to amplify your returns and provide exponential growth. Compounding re-invests your returns to create substantial wealth in the long run.
The importance of investing for a Child's Future. The importance of investing for a Child's Future.

When is the Right Time to Invest in Children's Investment Plans?

If you are wondering when is the right time to start saving for your children, the right time to start investing in a children investment plan can be well explained with the following critical factors that are to be considered.

Early Start

Early Start

Long-term investments have the advantage of investing less and earning higher returns. Time is a critical factor in wealth creation. So, the earlier you start investing in the best investment plan for child, the lower the burden on your pocket.

 

Birth or Early Childhood

Birth or Early Childhood

Several child investment plans in India provide the benefit of investment as soon as your child is born. Take advantage and start saving from the day your child is born so that you will have a longer time frame to build a huge corpus.

Stable Financial Situation

Stable Financial Situation

Besides inflation, other expenses like higher education, weddings, etc., can impact your financial goals. It is necessary to start saving early to build a stable financial situation, as the returns will be better.

Goal-Based Savings

Goal-Based Savings

Goal-based savings will help assess the financial requirement at a future date to fulfil goals at different life stages. Planning investment early in a children investment plan to align with each financial goal will help build a corpus adequate to fulfil each goal separately.

Education Planning

Education Planning

The cost of education, from primary education to college education, can rise with inflation. Planning early to provide for education expenses at every level of education is important to fulfil the education goals of your children. 

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HDFC Life Child Investment Plans 2024

At HDFC Life, we understand the significance of securing your child’s future. We have meticulously crafted our Child Investment Plans to address the diverse financial needs of parents. With a range of options, from ULIPs to endowment plans, we offer flexibility, transparency, and the assurance of a financially secure future for your child.

What are the Crucial Milestones You Should Consider Planning For?

The financial planning for your children’s future should cover the various milestones in their lives. The important milestones to consider are as follows:
Education Expenses of Your Child

Education Expenses of Your Child

Saving for your child’s school and college education should begin early so that the corpus is ready to meet. Start saving early to meet the rising cost of higher studies in India as well as abroad, as it can be overwhelming in the absence of a corpus.

Skill Development and Extra-Curricular Activities

Skill Development and Extra-Curricular Activities

Skill development and extracurricular activities enhance your child’s experience and help reinforce what is learnt in the classroom. Skill development and extracurricular activities prepare your child to meet real-world challenges.

College and University Expenses

College and University Expenses

You should assess the mounting cost of college and university education expenses vis-a-vis inflation and start saving early to have sufficient corpus.

Wedding Expenses

Wedding

You may, at times, ignore this milestone, thinking that it is way ahead. But, deciding how much you would like to spend for this crucial milestone for your child, you should start planning to invest in the investments plan for child early to create a corpus for this vital occasion.

Emergency Fund

Emergency Fund

There can be emergency expenses like a study tour, a science project, etc., which may seem challenging if there is no financial plan available for emergency funds. Several child investment plans in India allow part withdrawal and provide loans against the policy when in need of urgent funds.

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Benefits of Child Investment Plans

The following are the benefits of investing in a child plan:

Benefits of Investment and Protection

Benefits of Investment and Protection

Choosing investment plan for childlike unit-linked plans, will give the dual benefit of financial protection and investment. Your child will get a lump sum in case of any eventualities, and the investment component will provide high returns.

Tax Benefits

Tax Benefits

The child investment plans in India are life insurance plans. Section 80C under the Income Tax Act 1961 provides for a deduction of up to Rs. 1.50 lakhs in a financial year for these plans. Some plans also offer tax benefits on the maturity/death benefit under Section 10(10D).

Sum Received Upon Maturity

Sum Received Upon Maturity

Child investment plans in India provide a lump sum amount on the maturity of the plan. The choice of the time frame for maturity to align with the financial goals is provided.

Allows Partial Withdrawals of Funds

Partial Withdrawals

The ULIP allows partial withdrawals of funds to meet emergency financial needs after the lock-in period.

Ensures Your Child’s Education Is Covered

Ensures Your Child’s Education Is Covered

A unique feature where the policy remains active even when an uneventful incident occurs. The further premiums are waived. The funds continue to grow till maturity and ensure your child’s education is covered. 

Emergency Reserves

Emergency Reserves

The children investment plan serves as emergency reserves with loans available against the policies in times of need.

Calculators to Plan Your Child’s Financial Future

To help you make informed decisions, we provide comprehensive calculators designed to assist you in planning your child’s financial future.
Child Education Planner

Child Education Planner

The Child Education Planner calculator helps you estimate the future cost of your child’s education based on their current age, the age when they will start the course, the current cost, the inflation rate, and more. It enables you to set realistic savings goals to ensure you prepare for your child’s educational expenses.

Marriage Expense Calculator

Marriage Expense Calculator

The Marriage Expense Calculator aids in estimating the cost of your child’s wedding. It allows you to plan your investments and give your child the wedding they deserve.

Investment Calculator

Investment Calculator

The easy-to-use investment calculator empowers you to plan your investments, estimate returns, and navigate the world of financial security.

FAQs on Child Investment Plans

1 What are the key factors to consider when choosing a Child Investment Plan?

The key factors to consider when choosing a child investment plan are risk involvement, the financial goal, tenure, liquidity, volatility, and the credibility of the Company.

2 Can I withdraw funds from a child investment plan before maturity?

Yes. You can withdraw funds from a child investment plan after the lock-in period.

3 Which is the best investment for child?

Long-term investments with both the life cover and the investment component are the best investment plan for child.

4 Can I avail of a loan against child investment plans?

Loan against child investment plans depends on the plan that you are going with.

5 Which plan is best for your child’s future?

The best plan depends on your financial goals, risk tolerance, and investment horizon. ULIPs are ideal for those seeking market-linked returns with insurance coverage. Traditional life insurance and endowment plans provide a mix of protection and savings. You can consult a financial advisor to determine the most suitable plan for your child’s future.

6 How to invest for a 7-year-old?

Investing for a 7-year-old involves considering a combination of factors, including the investment horizon, risk appetite, and financial goals. Child-specific investment plans are popular choices. Tailor the investment strategy based on your child’s future needs and your risk tolerance.

7 What is HDFC Life’s plan for a girl child?

HDFC Life offers child plans that help you build a corpus for your child’s future needs. Our offerings provide financial security for both boys and girls. Parents looking for plans for girls can consider the Sukanya Samriddhi Yojana.

8 Can I open an SIP for kids?

 Yes, you can start an SIP for your child. Many financial companies offer SIP options specifically to help you meet your child’s future financial goals. These plans often have a lock-in period until the child reaches adulthood, helping in disciplined savings for their future.

9 How do I buy bonds for my child?

You can buy bonds for your child through various channels, including banks, financial institutions, or online platforms. Consider government savings bonds or fixed-rate bonds for stable returns. Consult with a financial advisor to understand the best options based on your child’s investment horizon.

10 How to invest for a newborn?

Investing for a newborn involves a long-term perspective. Consider starting with options like child insurance plans, SIPs, or fixed deposits. Remember, a longer investment horizon allows for a more aggressive and potentially rewarding investment strategy.

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