What is a Child Savings Plan?
It is an investment plan, also known as children’s savings plan, where parents pick a scheme based on its features and then pay the premium amount regularly. The money accumulated can be utilised for supporting a grown-up child’s educational needs or can be used to support any business they want to start. It can also be used to purchase property or any other asset, so that your child can start building wealth early.
This acts as a savings as well as insurance plan, as on the parents’ death the child receives the entire amount, which can then be utilised for higher education or to support other expenses.
Benefits of Child Savings Plan
Emergency fund: This investment scheme can be used as an emergency fund, if required, as you are allowed to withdraw a part of the funds in case of an emergency.
Tax savings: If you have been regularly paying the premium for this investment scheme, you are eligible for tax deductions up to Rs 1 lakh 50 thousand. Therefore, creating funds for multiple children does not become a burden for parents.
Investment options under Child Savings Scheme
SIPs allow you to invest in several types of funds, and are sometimes the best tools for saving and wealth buildings. You need to regularly invest through SIPs and choose whichever funds you are interested in, be it debt funds, equity funds or hybrid funds.
Child ULIPs are schemes which allow savings and an insurance cover, so that your child is financially secure in all conditions. However, it is necessary to know more about the terms and conditions as well as fees associated with the scheme before investing.
Wish to start a child savings plan but not sure what the steps are? Contact our experts at Daily Finserv, and they will help you create a financial plan through which you can easily achieve your financial goals.
