Lighten up your child’s future

“The child must know that he is a miracle, that since the beginning of the world there hasn't been, and until the end of the world there will not be, another child like him.”—Pablo Casals

Child is a bundle of joy and pride forever, the apple of the parent’s eye. For all parents, child is the source of all felicity. You want the very best in life for your child in terms of education and medical facilities and you know that in order to achieve that, you need to start planning early.

In early days, education was not that expensive, but with the passage of time, education has become costly. Years later, things are only going to get worse. So the sooner you start, the better it is.

1. Start early

If you want to provide the best education for your child, then the key is to start saving early.

Save on a monthly basis from your earnings to secure your child’s future. Also, invest a part of the saved money somewhere, so that it yields profit with the passage of time and glitters your child’s future.

In addition to putting away money for your own retirement, have an account earmarked for your child. As she gets older, you will be able to tell her that she has this account, and at a certain point, having watched it grow from acorn to oak, she will happily take shelter in its shade.

2. Investments

When it comes to actual investing, most parents look for investment products that are actually termed as 'Children's Plans.' This in itself is the mistake. Investment products do not come with an 'Adults Only' certificate. Which means that you can use precisely the same investments for your child that you use for yourself.

3. Term Insurance

If you plan to buy insurance for your child, then go for 'Term insurance' because most money back policies offer an extremely low return over a long period of time and the premiums are also very high.

In case of term insurance, all the money that you would save on account of the low premium can be invested for the long-term for your child.

4. Best investment- PPF

PPF, an instrument which is generally considered to be ‘Adults Only’, is the best investing option for your child.

If you invest Rs 70,000 in your child's PPF account every year, 20 years from now, you will have an astounding amount of around Rs 32 lakh at your disposal, which you can use for the education and marriage of your child and still have some left over. Such is the power of compounding and selecting the right plan.

5. Invest funds in your own name

Most people commit the mistake of transferring capital into child’s name. Your child is still a child and he or she doesn't have the capacity to make proper financial decisions. So it is you who must make these on his or her behalf by making optimal use of the instruments at your disposal.

In fact, it is sensible to invest the funds in your own name, setting aside the capital for the child. This way, you prevent any misuse of the money by misguided immature children.

6. Discipline

Disciple is what you need the most, so that you keep the earmarked funds invested for longer periods of time. The power of compounding makes the money grow more salubrious and your child attains majority.

Investing for children can be one of the most rewarding financial decisions you will ever make. Time is on your side, and even small monthly contributions into a regular share-based savings scheme can turn, 10, 15 or 18 years later, into a nest egg for your child's trip to university or college, or a deposit for their first home.