Skip to main content

Invest in child ULIPs for long term

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

IN THIS dynamic and competitive sociocultural environment, the cost of bringing up a child especially with respect to affording quality education has posed an even greater challenge.

Child education costs have sky rocketed in recent years. Recent trend shows more parents sending their children abroad for higher studies, which results in significant expenses. This is expected to increase in future given the increase in demand and factoring in inflation.


Birthday, a perfect occasion: Most parents however, start planning for the child's future quite late. Their focus on meeting the rearing priorities usually leads to overlooking their financial planning. To reap the benefits of financial investments, it is always advisable to opt for financial planning for child's future during the child's forma tive years (three to nine years) so that 10-15 years of investment horizon is available for a bigger corpus when the child turns 16, 18 or 21, ready for under/post graduations courses. The earlier parents start planning and investing, the longer is the investment period and bigger the corpus.

In fact, child's birthday is the perfect occasion to buy a child plan as parents with young children usually invests a lot of time and money planning, but may not be necessarily be thinking about the child's secure future during this early period. This occasion, which occurs year on year is best for long term financial planning for child's secure future. Our internal research also reiterated that for parents `birthdays' are relevant to their lives and buying the product on their child's `birthday' will remind them to pay premium every year.


Child Ulip, the perfect choice: Plans designed on unit-linked platforms usually referred to as unit-linked life insurance plans (Ulips) benefit parents over long term to gain from both protective umbrella of insurance and higher return from equity.

Child Ulips are transparent and allow parents to choose the investment vehicle, according to their risk appetite. Most preferred instruments like bank fixed deposits (FDs) and post office savings earn lower returns in long-term or beat inflation rate by a margin. As a result, in couple of years, it can bring down your purchasing power and capital too. Equity, on the contrary, will beat inflation with far better margins in the long run. Moreover, investing in life insurance ensures that parents are disciplined when it comes to preparing funds for the child, which is not the case in case of other products such as FDs. Having a child plan ensures that any contingency will not derail plans for the child's future.

One might argue that child Ulips due to its linkage to equity markets and investment risk being borne by the customer may not be a good option, especially when saving for child's financial needs. The advantages of child Ulips are, however, manifold provided parents choose the right Ulip that either has an inbuilt provision for derisking or offers the flexibility to do so.

Parents should have to keep three things in mind when they invest in a child Ulip. The investment horizon should be long term to average out the market volatility and offer better return. It is important to start with higher allocation to equity during the inception of a policy and reallocate funds as one approaches milestones, that is, you should switch from equity to debt funds gradually to safeguard funds and to even lock in gains from equity market.

Thirdly, an essential feature to look out for is waiver of premium in case of unfortunate event of death or disabil ity of the proposer who is generally the parent. This feature is mostly available inbuilt in a child specific plans, but may also be offered as optional benefit.

Savings for the child is time bound.


What it means is that the funds are needed at periodic intervals to fund school, college, higher education, etc. The payout years should be timed as per the age of the child.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...
Read more

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...
Read more

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now