The batch of 2018 of the IIM-Ahmedabad, India’s bluest of the blue business school, will shell out close to Rs. 20 lakh as tuition fees. This shows a steady rise in cost of education. Gold, which is considered as one of the safest and most liquid investments and inevitable in Indian weddings, too underwent a drastic price hike. In the year 2000, the price per gram was around Rs. 440 per gram. Currently, it stands at around Rs. 3000 per gram. However, you can beat inflation – by careful planning and consistent execution.
Starting to plan for your children’s future should start at the earliest. When people hear the word investment, it brings out all the old defences. This is because they think they cannot afford to invest or it will require them to compromise on their lifestyles. In fact, investing can start from as small an amount as Rs. 500 per month. On this Father’s Day, let us discuss 5 practical and doable ways to secure your children’s future financially.
- Post Office Savings Account
It is important to make children understand that fathers do not magically spin money out of the air. Starting a post office savings account in your children’s name is an old-fashioned, but a surefire way to inculcate money management skills in them. While you may deposit a fixed amount in it as you see fit, you can also encourage your kid to save money from their pocket money (or money they get on festivals from parents, relatives etc. or money they win in competitions). Let this be their official piggy bank!
- Sukanya Samriddhi Yojana
In India, most parents spend bulk of their life’s earnings on their children’s weddings as per the official data. A praiseworthy initiative from the Government of India to encourage parents to invest for their girl child’s future, you can open Sukanya Samriddhi Yojana in your child’s name. You can start as small as Rs. 1000 per year and up to Rs. 1.5 lakhs per annum. Aside from an attractive interest rate (currently stands at 8.1%), it also comes with a host of benefits like eligibility under 80C deductions and no TDS.
- Life insurance
Life insurance policies have always come across as bitter pills, perhaps, due to their implications. However, there is no denying the fact that life has a way of throwing surprises and shocks at us, and it is imperative to be prepared. Buying a life insurance, especially a child plan, has almost become the need of the hour. In case of an unfortunate demise of the earning member, this plan can take care of the rising cost of education and other needs of growing children.
There is no need to elaborate on Indians’ penchant for gold. It seems that no wedding is complete without gold. Indians consider gold divine, but more than that it is a reliable investment. Many a person have been known to mortgage gold in case of sudden emergencies. Liquidating any other investment takes time. These days, there are other options like Gold ETFs or Sovereign Gold Bonds too. They are gold in demat format (physical gold is the underlying asset). It is secure and gives the same value without the hassle of storage and maintenance or paying extra making charges.
- Mutual fund
As mentioned before, the cost of education is going beyond affordability and only timely investments can balance this. Mutual fund has gained much favor in the last decade due to their high potential. For instance, there are many long-term funds, like tax-saving mutual funds, that have delivered historically supreme returns (14% to 18%). As a long-term investment that accumulates with the power of compounding, it has proved to be more lucrative than other similar saving instruments like FD. In this, you also have the option to invest through SIP of as small as Rs. 500.