What are child investment plans why you need them

Do you know what the cost of child education in India is right now? You’ll be shocked to find out that educating a child from primary school to secondary alone can cost you between 10 to 15 lacs in a good private school. On top of that if consider higher education an engineering degree too can cost you 5 to 10 lacs and then you still have to pay for post-graduation abroad. Educating a child in this country is not cheap, and this is something you must remember when buy child investment plans.

We take our kids futures’ very seriously and want to do what best for them and provide them with everything we can. Child investment plans are the best way to ensure that your children get everything they deserve, especially when it comes to education.

A great investment plan for children is a child education plan. The ultimate goal of this plan is to help you save money for your child’s future education needs. Most children what to study abroad after graduation and this plan can help you fund those dreams without creating a huge hole in your savings.

Planning for your child’s future needs is not easy, so here’s a guide that will help you plan and get the best possible financial support for your children.

1.      Start early: Like all investments, child education plans too need to be started early. You can even start investing right when you child is born. This way when the time comes for you to pay these expenses you will already have a good corpus saved up for your child’s education.

2.      Research: Do proper research about costs and expenses before you invest in a plan. You may have taken the same courses and degrees as you child, but the costs you paid were very different than what they are today and what they will be in the future.

3.      Think long term: Child investment plans are not a short term investment. You need to invest in these plans for a long time for them to give you benefits in the future. Do not invest in short term investment plans for children as they may not help you when you need more money in the future for your child’s education.

4.  Invest no matter what: Even if your child decides to start up a business after graduation or simply does not want to study forward, you can still receive benefits from you child investment plans. They receive a lump sum on maturity and this lump sum can be used for other expenses or invested somewhere else too.

Five important tips to help your create wealth plans in your early life

When you start earning, the first thing you do is indulge. You buy all that you can get, spend on all the luxuries you can afford and generally live the life you want. Wealth plans are hardly ever on the agenda when you start earning and even later. People generally think about wealth plans and investments in later stages of their lives when they need to save for things like a home, their children and health care.

When it comes to wealth plans though, starting early is the key to have a good plan. When you invest in a wealth plan early you can rest assured that you will have acquired a decent lump sum for yourself when you’re settled and need to make more investments.

But wealth plans and deciding how to buy them can be tricky and is a financial commitment that you should not get into without know it thoroughly. So here’s a guide to help you create wealth plans of your, own along with some tips on saving and investment.

1.      The first step to creating wealth plans is saving. If you spend all your disposable income in your early years you will have nothing left to invest. Budgeting and saving money is the best way start on wealth plans. Once you’re able to save up a good chunk of your monthly income you can begin investing it.

2.      Invest in ULIPs. A ULIP plan or a unit linked insurance policy is insurance as well and investment plan. When you invest in ULIPs, a part of your premium goes towards life insurance while the other part in invested, either in equity or in debt, depending on your final goal for investment. ULIPs are a great way to invest your money for future wealth.

3.      Frame your financial goals in a way that you know how much you need to save. Be it for buying property, for the education of your children, to pay the healthcare expenses of your parents or investing in a business or even for retirement, you need to know what your ultimate goal is, in order to create accurate and effective wealth plans.

4.      Research and study every financial tool that is available to you. You should always invest in schemes and plans that you are thoroughly familiar with. Plans like ULIPs, mutual funds, PPFs etc are a great way to invest your money, but only if you know what you’re getting into.

5.  Learn about tax savings early on. Financial tools like life insurance can help you save on income tax. You should know about these tools early on, so you can save tax and in turn save more money.

Effective retirement planning for a comfortable life post retirement

When planning for the future we think of everything from investment plans, insurance plans, health plans but very few people actually consider pension plans. People usually leave retirement planning for the last people or a few years before they’re due to retire. This is risky business because the best retirement plans are those that start early.

You never know when you may require money when you retire. It could be for a medical procedure, some new investments, helping out your children with their education or business ventures. Or it can be as simple as to travel, buy your dream house where you can spend your old age peacefully. Retirement plans India aren’t given much consideration, but this has to change. While you save for your child’s future, their education, their wedding and their businesses, you should also be saving for your own future as well.

Early retirement planning can help your create a pipeline of investment and accumulate a lump sum that you can use when you retire to lead a comfortable life. For effective retirement planning depending solely on your employer’s pension plans is not enough.  Here are some plans and schemes that you must invest in, in order to have a comfortable retirement.

1.  Invest in ULIPs: You can alter your ULIPs on the basis of what you want to save for, it can be your own business, your child’s education or your own retirement. Unit Linked Insurance Policies that focus on retirement plans invest in equity based funds to avoid taking risks, in turn providing you with handsome returns.

2.  EPFs: The Employees Provident Fund is another way to ensure return during retirement.     It is perhaps one of the most popular pension plans in India. Currently the rate of return from EPF is fixed at 8.5% p.a. EPF also offers deduction up to 1 lakhs limit under section 80C. The interest from EPF is tax free and withdrawal is also tax free if there is continuous service of 5 years.

3.  Invest in bonds: A bond is when a company borrows from you. Purchasing bonds of a particular company is like giving that company a loan. The company will pay you interest on your loan. In the case of some companies the interest can be as high as 10% or 12% p.a. These bonds usually have a maturity of 10 to 15 years. They’re a great way to invest your money for retirement.

Term insurance for parents is the best way to secure your family financially

As parents, one of the biggest worries people have is how to save enough for their children so that they don’t suffer if anything unfortunate happens to their parents. Term insurance for parents is the best savings tool for anyone who wants to ensure that their dependents can be financial secure even after their death.

Term life insurance is a very simple form of insurance. In this policy the policy holder needs to pay a low premium through its term. If the policyholder survives the term of the insurance, neither he/she nor their nominee will receive any payment. But if the policyholder passes away during the term of the policy, his or her nominee will receive a substantial lump sum payment from the insurer.

Term policy is preferred by main because of its simplicity and inexpensive premiums. It is a good way to ensure that your children or any other dependents are taken care of financially in your absence. There are many other advantages of taking term life insurance. Here are some of them.

1.  Simplicity: Term life insurance plans are straightforward. Unlike other insurance plans this type of insurance is simple and easy to understand even for the layman. This makes it easier for the policy holder to make proper, timely premium payments.

2.  Flexible: Opting out of a term life policy is much easier than getting out of other policies. In term policies if you stop paying premium the risk cover ceases and the policy ends. Nothing is payable to you as there is no savings element in the policy.  

3.  Renewable: Many term life insurance policies are "renewable" and "convertible." Renewability ensures that you can go in for another term policy without a medical exam at the end of the first term policy. Convertibility allows you to convert your term life policy into an endowment policy for the same sum assured with associated increase in premium, should this make sense during the term of the policy.

4.  Substantial pay-out: Depending on your policy you can ensure that you can provide for the various financial needs of your family through your term insurance. Term plans for parents are designed in such a way that they can provide for their child’s higher education, business venture, weddings or any other requirement even in their absence.

5.  Cheapest form of life insurance: You will not have to pay a huge premium overtime to ensure that your family is financial secure even after your death. Term life insurance comes at an affordable premium, which means that everyone can buy it.

Six plans that will ensure best returns in 2018

Financial year 2017-18 is about to come to an end and now is the right time for you to begin tax planning for the coming financial year. It’s that time of year when you need to sit down and review all your term insurance, health insurance and other investment plans so that you can save on your income tax.

Investing in the right kind of plans can help you save income tax. Here are a few plans and policies which you should consider investing in this year to ensure you save tax next year.

1.      Life Insurance Plan: Life insurance plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan.

2.  ELSS Tax Saving Mutual Fund: They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%. You can even opt for the dividend scheme and earn regular income from your investment.

3.      Health Insurance Plans: With the growing cost of healthcare in the country, there is really no other way to pay for medical expenses then to invest in health insurance. Even though this may not be an investment that gets you high returns, it is an essential investment that can save a lot of expenses. The Income Tax Act also has provisions to claim deductions on payments for your health plans. 

4.      Rajiv Gandhi Equity Saving Scheme: This scheme offers benefits for first time investors with income upto 12 lacs. The maximum investment allowed in this scheme is only Rs.50,000 this can be invested in stocks or mutual funds. This scheme gives you a tax exemption of upto Rs.25,000.

5.   Voluntary Provident Fund: This fund is the contribution of an employee to his provident fund, it is beyond the 12% EPF.  This fund carries the same rate of interest as the Employee Provident Fund. The current rate for EPF is 8.8% per annum. However, investment in VPF can only be withdrawn during retirement and not before.

6.  Unit Linked Investment Plan (ULIP): This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for a minimum duration of 10-12 years to seen maximum returns.

Consider these five factors when calculating your term plan amount

One of the most important questions you will face when you buy insurance or a term plan, is how much is sufficient insurance for you.  Many factors should be taken into account when you decide you insurance amount. The amount should be sufficient for your dependents to survive on if you’re not around to provide for them.

Sometimes, just a simple term plan is not enough to supplement income if the sole breadwinner of the family passes away. In such cases, one must also invest in an endowment plan to ensure that his or her dependants are taken care of financially, in their absence. An endowment plan is an investment as well as an insurance. Unlike term plans where the beneficiary will only receive a lump sum payment in case of the death of the policyholder, in an endowment plan you will receive the entire corpus of your investment at the end of your term. Along with being a good insurance plan it is also a great way to save for your future.

There are certain thumb rules to follow when deciding your life insurance cover. These are the major things that you should always consider when you’re buying any kind of life insurance. Take careful note of these when you make insurance purchases.

1.  Income: This is the first and foremost factor you should take into account while choosing the amount for your term or endowment policy. Your insurance cover should be sufficient for your dependents to sustain themselves if something unfortunate were to happen to you. Your insurance cover should be atleast 15-20 times your annual income.

2.  Debt: This is the second thing you need to consider. You don’t want your family worrying about loan payments when their grieving. Ensure that you term plan amount is sufficient to pay off any debt or outstanding loans you may have taken.

3.  Standard of living: Your term or endowment plan should be enough so that your family can maintain the same standard of living even when you can’t provide of them. Your standard of living means your monthly expenses such and maintenance charges, school or college fees and other expenses such as food, travel etc.

4.  Inflation: You need to consider the amount of inflation because your insurance will be used at a later date. Prices as they are today will change according to inflation. So what might be sufficient cover today may not be sufficient tomorrow.

5.  Future expenses: If you’re providing for your family you need to take into account any foreseeable expenses like higher education, medical expenses, business expenses or even wedding expenses to ensure that your insurance cover is sufficient.

Five savings and endowment plans to invest in, in 2018

It’s that time of the year again, where everyone is in a hurry to get their finances in order. The fiscal year is coming to an end and investing in savings plans and endowment plans is the best way to save on some income tax.

A savings plan is a scheme, where the investor puts away a part of his income, over period of time and then at the end of the term, receives are lump sum payment. An endowment policy is a form of life insurance plan where in the policy holder receives a lump sum payment on maturity or he or she dies before the term is up.

These plans are great tax savings tools because in some cases, the pay-out you receive from these policies is tax free. If you’re wondering where you should put your money this year, then here are 5 schemes you should consider.

1.  Unit Linked Investment Plan (ULIP): ULIPs and endowment plan and are a great way to invest your money. They provide insurance cover as well as give you returns through equity. This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for a minimum duration of 10-12 years to seen maximum returns.

2.  Life Insurance Plan: Life insurance plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan. The life insurance claim that you receive on maturity of the policy is tax free.

3.   ELSS Tax Saving Mutual Fund: They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%. You can even opt for the dividend scheme and earn regular income from your investment.

4.  Public Provident Fund: This fund provides maximum tax saving benefit for the people. The interest rates are updated by the government on a yearly basis. Most banks offer a PPF facility for its customers. This scheme ensures maximum tax saving benefit for its users. At the moment the government allows around 8% interest in PPF.

5.  Five- Year Fixed Deposits: FDs are great savings plans. Banks offer fixed deposits that provide tax benefits. These deposits are exempted under Section 80C and they have a lock in period of five years.