Factors To Consider While Searching For Child Plans

When you are a parent, one of the biggest responsibilities you have is securing your child’s future. Whether you are a young parent or older one, single parent or co-parent, parent to one child or children, you would feel the need to ensure that they have the financial resources not just to survive but also thrive in today’s world.

That’s why it is important to look for financial products that will ensure your child has enough financial stability to launch them into a life they wish to live.

Thus, what are the factors you need to consider when you’re searching for financial products for your child? Let’s explore:

  1. Starting early

You know how relatives and friends give the child an envelope full of cash when the child is born? It is wise to gather all that money, add some of yours, and start an investment in your kid’s name right from day 1. It is never too early to start securing your kid’s financial future.

  1. Risk appetite

The inherent uncertainty of the economic markets means that we cannot accurately predict how our investments will do in 10 years or even 1 year from now. Inflation, world politics and policies, pandemics, climate change, etc. all have a complex influence on how our investments will turn out eventually. Hence, have an honest conversation with yourself, your partner, and your financial planner about how much risk you are willing to take when it comes to your investments in children’s plan. Do you want something that is market-linked? Or an endowment plan with very low risk is the way to go for you? You can explore different HDFC Child Plans along with others to figure out what the various risks and potential returns are.

  1. Kind of investment you make

You can start a SIP in your child’s name with as little as INR 500, or you can opt for a life insurance cover for yourself which commands a yearly premium of as much as INR 60,000, with your child as a nominee. Whatever you decide, make sure you have thought about your current income and made provisions for any increase in income or even expenses.

  1. Withdrawal timelines

Whether it is an education plan or a ULIP, check what the pay-out/reimbursement timelines are. If your child is looking to study abroad, then will they be able to withdraw all the funds from their education plan in one go if needed, or will the pay-outs be stacked?

  1. Type of goals

Are you planning for your kid’s educational future specifically or want to build a general-purpose corpus for them? Think about the goals for your investment and accordingly choose a financial product that suits your investment objective.

Take some time to understand the features of all the child plans available for your child. Avoid false starts by doing your research and consult your co-parent or financial advisor if needed so that you can make an informed decision about your child’s future.

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