How to Save For Children’s Future – Financial planning is very important for securing children’s future. Raising a child and educating him or her through college is expensive these days. It is not possible if there is no proper planning. The pandemic has opened up the eyes of people and made them realize the importance of working towards creating a blueprint for saving for your children.
Uncertainty brought about by the pandemic has underlined the importance of saving and investing. In this period many people lost their jobs and businesses lost their income. Now the idea for securing the future is on everyone’s mind especially when the economic situation has become so fragile. No one can predict when things will become normal.
Financial experts say that one must start investing early and set up realistic goals. There is no denying that one must embark on a multi-pronged strategy involving saving in fixed deposits and investing for reaching ones financial goals. Over a period of time you will be able to accumulate a decent sum of money for fulfilling your demands including education for your children.
There are many financial instruments available that can provide excellent returns. However, financial sound judgment is needed for selecting the best tools for compounding your money over a period of time. If you are not financially aware it is imperative that you seek expert advice before taking any financial decisions.
Important Financial Products –
Investing in equity market
Think investing first thing that comes to mind is stock market. However, participating in the market is subject to market fluctuations and risks. Mostly people believe that investing in stocks is risky. It is the reason people stay away from the equity market.
Notwithstanding the risks and volatility, equity market is the only platform where one can get manifold returns on your money. It is not easy as we hear so many stories of investors losing huge sums of money. It is worth noticing that it is a place for raising capital money for the companies for their growth and expansion.
It is but natural to wonder how so many people end up losing such huge amounts of capital. At the same time you also hears stories how investors amass unmatched wealth from the stock market. Common perception amongst people that investing in the market is like gambling. However, the perception is not completely wrong with so many people losing money in the market.
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Getting excellent returns in the market is possible only if you have first got first-class financial education and skills. It is imperative that one invests in solid companies with high quality products and proven growth record. Always keep an eye on quality stocks. Time to buy them comes when they are available at a good bargain. Then keep adding to them as they reach new highs until you sell them when they are unable to reach new highs.
Fixed Deposits (FDs)
It is the most preferred option for investors for parking their money. It is popular because of guaranteed returns it offers at a fixed rate of return. Unlike investments in stock market, your deposit continues to get a fixed return.
Your money will remain safe and continue to earn the predetermined interest unaffected by volatility of the markets. Safety of investment and guaranteed accruals of interest makes it so popular with the masses as they do not have financial knowledge and skills to handle market fluctuations.
Lay persons are satisfied with getting 5.40% returns on their long-term deposits. There is no denying it remains the best investment for persons with no knowledge of financial markets. If they keep doing for 20 years they will no doubt earn decent compounding on their money.
All private and public banks provide the facilities for opening saving accounts with privilege for starting FDs. Different banks offer different rates of interest for term deposits. It is up to you to decide which one you choose as per your requirements.
Child Savings Account
Opening a child saving account is an excellent idea. It is the 1st step for educating your child the value of saving money. The child will learn how to save money and he/she will also pick up important money management skills. There is no denying it is an important life skill for the children.
We do not teach children any financial skills in the schools. If you start teaching the importance of saving and investing to kids, they will imbibe the importance of money management and financial skills. There is no denying the fact growing up with such knowledge will impact their future in a positive way.
Apart from teaching finance, opening a child account you will be able to save for the future of children. You can open the account for children below the age of 18. However, it needs monitoring of parents to steer and guide their financial behavior in the right direction.
Monitoring of child account becomes necessary after they get a debit when they become 10 years old. Watching their transaction you will be able to gauge the direction of their financial conduct. With the data of their transaction, you can teach them to control impulse spending. It will aid them in learning how manage money and how much to spend.
Life Insurance
There are many ways you can ensure financial sustenance of your family. There are so many financial products available to meet your different needs. Life insurance is one such product with which one can secure the finances even after you are gone.
Purchasing a life insurance policy is the best instrument for providing financial security to your family including your offspring. It is considered the best financial product for securing the future of the family in the event your untimely death.
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Having a life insurance cover, you family will be taken care with the money they will get from the insurance claim after your death. It will help your kids to finish their education with the money.
Mutual Fund or SIP
There are avenues available for investing to accumulate capital appreciation. One of the most popular product people opt for is investing in a mutual fund or starting an opening a Strategic Investment Plan (SIP) account.
Benefit of opting for SIP is that you can start it by investing a minimum of Rs 500. This gives opportunity to investors short on funds. And, by investing Rs 500 every month they can accumulate a decent sun over a long period of time.