One of the most unique and inexplicably happy events of life is having a baby. This little bundle of joy keeps everyone on their toes, creating madness around the house and your lives, but somehow, it all seems worth it. You will want the best for your kid but with so many investment avenues, it becomes difficult to choose the best for your kid. Here are the multiple options you can choose from when deciding to invest for your child.

Before delving into the types of investment, it is important for you to know the various investment needs of your child. Largely, you can divide the needs into two broad categories, short term and long term.


Short term goals

For short term goals, like school fees, hobby classes, tuitions, medical and clothing expenses, fixed deposits, short term funds, bonds with lower maturity or similar SIP’s make sense. Though they garner not so high returns, the risk is low or moderate. Other reasons for short term investments can be a trip with your family, or investing in honing your child’s special skill set, like coaching for sports or music.


Long term goals

It is important to be well prepared, in case of any unfortunate unforeseen circumstances. A good life insurance plan, medical insurance, accident cover, PF, equity mutual funds etc., these are good tools of long term investment.

A few good life insurance policies will make sure that your child’s education, living expenses, marriage are covered.

 

Public Provident Fund (PPF)

PPF is and has been one of the most favourite tools of investment for many years. The term of this investment is 15 years, making it an apt time for many parents to invest in them, as when the PF matures, your child is usually planning for further studies and you have a neat sum ready for your child.

Equity mutual funds are also an interesting tool for investment, due to its high interest rates and longer period of investment.


Gold Investment

Gold helps you get around during the tough times. Gold investment ensures you are protected from the risks in the financial markets. Experts suggest that gold investments should be either through Exchange Traded Funds, gold mutual funds or E Gold. It is better to avoid physical investments in gold so as to reduce the risk of storage. Moreover, prices of the paper gold is derived based on the current gold prices in the market, so it is similar to buying physical gold. If you purchase the gold in your kid's name, it is a good investment option for your child as it can be preserved for decades and can be sold or rented in case of emergencies. 


Real Estate Investment

One more investment tool for your child’s safety and security and that can give you returns, is investing in real estate. You can buy a property, keep it aside for about 10 or more years and put it back in the market about a year or two before you think you would require the funds. This also insures a good return once the property is sold off. But if you want to make the purchase on your minor child’s name, make sure this investment is made through the process of a hundred percent specific Beneficiary Trust created in the name of the your minor child.  By doing so, the income arising from such property will not be clubbed with the income of the father or mother.

Finally, don’t forget that the most important investment in your child’s life is – your time. Make sure you build a lot of happy memories with them, as they will be priceless!

Happy Investing!

Check out other articles in the series for more insights on investing in your child's future and having savings account for your child. Because when it comes to securing your child's future, nothing is enough.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.