Prepare for your Child's Edcuation
Credit: North Loop
Introduction -
There is no escaping the soaring cost of education, and if you keep in mind the inflation rate, the situation seems to worsen. That is why a comprehensive child development and education plan has now become a necessity. It can act as a medium of savings as well as battle the onset of various expenditures in the future. Such plans can provide guaranteed protection against the rising education expenses and also help acquire proper resources to allow your children to choose their favourite course or institute for higher studies.
Benefits of a Child Education Plan -
Fulfilling your child’s dreams - The inevitable impact of inflation on the cost of education cannot get ignored. It is due to this the educational expenses say ten years down the line can be double or triple the amount now. By choosing a child education plan that covers these aspects can help you meet such expenses in the future and give your children the liberty to go for an educational program that justifies their capabilities and fulfils their dreams.
Protection in case of unforeseen circumstances - Saving for child education way in advance can provide several benefits in case of unfortunate events like the death of a parent. If you invest in sound child development and education plan, your child can get at least 100% of the insured amount. Also, the policy can continue to work towards providing for higher education expenses, since the maturity amounts are approximately ten times the cost of the premium.
Maturity benefit to meet college expenses - By investing in a good plan and saving for child education, you can procure sufficient funds to help your children meet all their college expenses and additional educational costs. It can not only help them use those funds for the day-to-day college expenses but also allow them to enjoy all the major milestones in their life.
Partial withdrawals - You can withdraw money partially during a policy term to fund for any specific course that your child wants to take up. Most plans focussing on child education in India offer periodic pay-outs to help pay for the expenses incurred during such programs that enable your children to enhance their talents. Income tax benefits - The premium paid on plans for child education in India are eligible for tax deduction under Section 80C of the Income Tax Act, 1961 up to a limit of Rs.1.5 lakh per financial year. You can also avail tax benefits on the maturity amount under Section 10(10D) of the said act.
Avoid loss of capital - You can adopt a dynamic fund allocation strategy and opt for Systematic Transfer Plans or STP. That can help to plan investments as per the returns that you expect and the amount which will help you meet all your future expenses. If you invest with STP, you can also switch to different fund units when the market is volatile.
Protection in case of unforeseen circumstances - Saving for child education way in advance can provide several benefits in case of unfortunate events like the death of a parent. If you invest in sound child development and education plan, your child can get at least 100% of the insured amount. Also, the policy can continue to work towards providing for higher education expenses, since the maturity amounts are approximately ten times the cost of the premium.
Maturity benefit to meet college expenses - By investing in a good plan and saving for child education, you can procure sufficient funds to help your children meet all their college expenses and additional educational costs. It can not only help them use those funds for the day-to-day college expenses but also allow them to enjoy all the major milestones in their life.
Partial withdrawals - You can withdraw money partially during a policy term to fund for any specific course that your child wants to take up. Most plans focussing on child education in India offer periodic pay-outs to help pay for the expenses incurred during such programs that enable your children to enhance their talents. Income tax benefits - The premium paid on plans for child education in India are eligible for tax deduction under Section 80C of the Income Tax Act, 1961 up to a limit of Rs.1.5 lakh per financial year. You can also avail tax benefits on the maturity amount under Section 10(10D) of the said act.
Avoid loss of capital - You can adopt a dynamic fund allocation strategy and opt for Systematic Transfer Plans or STP. That can help to plan investments as per the returns that you expect and the amount which will help you meet all your future expenses. If you invest with STP, you can also switch to different fund units when the market is volatile.
Get a zero-balance, no-fee NRE/NRO account with North Loop in 5 minutes
Different investment options -
To meet your child’s education expenses, focussing on just conventional products can become insufficient. It is best to consider several products based on your time horizon so that it can cover whole child education expenses. Some of the financial products you may choose from include the following investment plans -
Fixed deposits - Fixed deposits are long-term investment options that provide fixed returns for a specific tenure. You can invest in fixed deposits at high-interest rates (7.50% with North Loop) and low risks for growing your corpus and meeting your child’s future education expenses.
Debt mutual funds - If your time horizon is around five years and your child will require the corpus within this duration, opting for debt mutual funds can get beneficial for you. These funds can deliver returns that are higher than the inflation quotient and also offer better liquidity than other investment options. You can also invest in these funds from the comfort of your home on a digital platform like North Loop.
Equity - Even though exposure to the stock market is a little riskier as compared to the above options, it can provide you with the opportunity to earn higher returns in the long-term. You can also combine different financial instruments like debt, equities and gold for long-term goals.
Public provident fund (PPF) - This investment option also gets considered as one of the best child education plans in India. If you start early and invest consistently, you can successfully build a large corpus for your child’s educational needs.
Insurance policies - Many insurance companies offer products that focus on whole child education expenses. These policies mature when your child requires the money to pursue higher education and can help avoid any financial burdens at that time.
Fixed deposits - Fixed deposits are long-term investment options that provide fixed returns for a specific tenure. You can invest in fixed deposits at high-interest rates (7.50% with North Loop) and low risks for growing your corpus and meeting your child’s future education expenses.
Debt mutual funds - If your time horizon is around five years and your child will require the corpus within this duration, opting for debt mutual funds can get beneficial for you. These funds can deliver returns that are higher than the inflation quotient and also offer better liquidity than other investment options. You can also invest in these funds from the comfort of your home on a digital platform like North Loop.
Equity - Even though exposure to the stock market is a little riskier as compared to the above options, it can provide you with the opportunity to earn higher returns in the long-term. You can also combine different financial instruments like debt, equities and gold for long-term goals.
Public provident fund (PPF) - This investment option also gets considered as one of the best child education plans in India. If you start early and invest consistently, you can successfully build a large corpus for your child’s educational needs.
Insurance policies - Many insurance companies offer products that focus on whole child education expenses. These policies mature when your child requires the money to pursue higher education and can help avoid any financial burdens at that time.
Best child education plans in India 2020 -
| Company/Bank name | Plan Name |
|---|---|
| Bajaj Allianz Child Education Plan | Bajaj Allianz Young Insurance |
| Bharti AXA Child Education Plan | Bharta AXA Life Child Advantage Plan |
| HDFC Child Education Plan | HDFC SL Youngstar Super Premium |
| IDBI Child Education Plan | IDBI Federal Dream Builder Plan |
| ICICI Child Education Plan | ICICI Pru Smart Kid’s Regular Premium |
| Kotak Child Education Plan | Kotak Head start Child Assure Plan |
| LIC Child Education Plan | LIC New Children’s Money Back Plan |
| PNB Child Education Plan | PNB Metlife Smart Child Plan |
| SBI Child Education Plan | SBI Life Smart Champ Insurance Plan |
| TATA AIA Child Education Plan | TATA AIA Super Achiever Plan |
As you can see from the table above, there are various child education plans in India currently, some of the popular ones being SBI child education plan, LIC education plan etc. It is best to choose amongst these options after evaluating each of their features, terms and conditions. You can also use our education loan calculator to understand your monthly loan payments (EMIs)
Conclusion -
The best investment strategy to use when preparing for your child’s career is to start by listing their desired education and its costs. That can help to note the definitive goals in a better manner and also aid in determining how much you need to save each month for reaching those goals. It is also crucial to assess the amount you can afford after meeting all your regular expenses and remember that jeopardizing your personal financial stability to fund ambitious educational plans for your children is not a great idea. That is why it gets recommended that you start early and adopt a consistent investment strategy as well as choose appropriate child education plans to overcome all your limitations and realize your children’s dreams.
To invest in fixed deposits, mutual funds or equity, sign up with North Loop here.
To invest in fixed deposits, mutual funds or equity, sign up with North Loop here.
Save money with
No-fee banking, investments, remittances & insurance for the global Indian
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.
Contact Us
+1 (614) 335-7856
help@nolobank.com
+1 (614) 335-7856
