Best Child Education Plans to Secure Your Kid’s Future

Think about it: Your kid is busy building plastic block towers or doodling colourful scribbles all over your walls. It seems like you just took them home from the hospital. But time flies. Those doodles will become complicated math problems, and that block tower will be a ticket to the kid’s dream of building skyscrapers or running a hospital.

We, as parents, want to give our children the world. We want them to get the best education, follow their dreams, and never have to say ‘no’ to a dream because of money. But the price of education in India is increasing rapidly. From school fees to tuition and university degrees, everything is getting costly.

Thus, a child’s education plan can be a lifesaver for you. Imagine it as a magic pot where you put a coin today, and later on, it turns into a mountain of gold when your child needs it most.

Child education plan what is it?

Basically, a child’s education plan combines two elements: Savings and Insurance.

• Saving: You save a small amount of money regularly (for example, monthly or annually). This money is invested to grow over time.
• Insurance: This is the key feature. If the parent (the breadwinner) dies, the insurance company takes up the responsibility. They usually pay the rest of the premiums themselves and make sure that the child still gets the total amount of money when they reach adulthood.

It’s a “safety net” that guarantees your child’s education will not be interrupted, regardless of what life has in store for you.

Why Should You Start a Child Investment Plan Today?

Surely you think, “A toddler! I have time!” But in finance, time is the magician. This magic is known as the Power of Compounding.

When you invest in your child’s future early on, you’d be amazed at how even the tiniest penny can reach a substantial amount. If you invest at birth, you get 18 years to contribute. If you decide on a 10-year-old, you are left with only 8 years. Early planning means less monthly savings for the same target.

1. Beating Inflation

A medical/engineering course today won’t cost the same 15 years down the line. It may well be double or even triple. A good investment strategy allows your money to outpace inflation so you are able to handle any price rise.

2. Disciplined Savings

We all try to save, but very often a new phone or a trip snatches the money. An exclusive solution is the means to help you stay in control. You realize this money will be “locked” for the child’s future, so you don’t even think of using it for small expenses.

3. Tax Benefits

The government of India is keen to see you save for your child. Most schemes permit exemption from income tax. This means not only are you saving for the child, but also pocketing more of your income.

Top Options for Your Child’s Future in India

India offers us many excellent options. Here, the most popular ones are explained simply:

1. Sukanya Samriddhi Yojana (SSY)

This scheme can be one of the greatest presents if you have a daughter. It is a government-backed scheme. It is a 100% safe investment with very high interest rates. For a girl child below the age of 10, one can open a Sukanya Samriddhi account. The funds can be withdrawn only when the girl turns 21, but 50% of the amount can be withdrawn for her higher education after 18 years.

2. Public Provident Fund (PPF)

If you want to get a very simple and risk-free investment, many Indian families make this their first choice. This is a secure investment, as the government gives a guarantee. Also, the interest you receive is exempt from tax. This scheme will be locked for 15 years, but this period can be used to save for a highly expensive goal like a college education.

3. Mutual Funds (SIP)

If you do not mind taking a risk to get significantly higher returns, you can choose a Systematic Investment Plan (SIP) in mutual funds. The initial investment can be as low as ₹500 per month. Through 15, 20 years, equity mutual funds have historically yielded higher returns than bank deposits.

4. Unit Linked Insurance Plans (ULIPs)

These plans allow you to have life insurance and also expose your money to the stock market. Most of these have a “Waiver of Premium” feature, which means if the parent dies, the insurer will pay all the future premiums, and the child is given the money as initially planned.

How to Pick the Right Plan?

Deciding on the best child education plan entails asking yourself these questions:

• How old is your child? The younger your child is, the more risk you can take with equities for higher returns. However, if your child has already reached teenage years, safer options like Fixed Deposits or PPF should be considered.
• Where do you want your child to study? The cost of studying abroad is substantially higher than in India, so your “bucket” will have to be larger.
• How much can you save? Be very truthful in budgeting yourself. It is better to keep on saving a small amount monthly regularly than to start a large plan and discontinue it after two years.

A Simple To-Do List for Parents

• Figure out the Cost: Find out the price of a college degree nowadays and think of the future as well.
• Start Small, but Start Now: Don’t wait till your salary has massively increased. Even ₹1,000 a month is a great start.
• Check for “Waiver of Premium”: Always make sure your plan comes with this feature. It is actually the “insurance” of your child’s dreams.
• Review Every Year: If your earning power goes up, aim to make your investment amount higher.

Conclusion

The smile of your child is worth a lot, and their dreams are even greater. Choosing the right child investment plan clarifies your support for their dreams, saying, “Dream big.” I’m here for you.”

Being mathematically brilliant is not necessary for securing their future. You mainly have to initiate the process now. Whether it is a government scheme or a market plan, the best time to invest was yesterday. Second best time is right now.