Sir we are a family of 4 members with 12 yrs son and 8 yrs daughter. My PA income is 12 lakh. what is the best policy to secure our children future.
Ans: Securing Your Children's Future
You are taking an important step in securing your children's future. With a planned approach, you can ensure their financial stability and educational needs are met.
Term Insurance for Protection
Term insurance is crucial for your family's financial security. It provides a significant cover at a low cost. In the unfortunate event of your untimely demise, it ensures your family's financial needs are met. Choose a cover that is at least 10-15 times your annual income to provide adequate protection.
Public Provident Fund (PPF) for Safe Returns
PPF is a reliable option for long-term savings. It offers a stable and guaranteed return, which is ideal for securing your children's future. PPF is backed by the government, making it a safe investment choice. The returns are also tax-free, adding to its attractiveness.
Mutual Funds for Growth
Mutual funds can offer higher returns compared to traditional savings methods. Actively managed mutual funds are a good choice as they aim to outperform the market. Fund managers make strategic decisions to maximise returns. Diversify your mutual fund investments across equity and debt funds to balance growth and stability.
Balancing Your Investment Portfolio
A balanced investment portfolio is essential. Allocate funds across term insurance, PPF, and mutual funds. This strategy provides a mix of safety, growth, and protection. Regularly review and adjust your investments to ensure they align with your goals.
Systematic Investment Plans (SIPs)
SIPs are a disciplined way to invest in mutual funds. They allow you to invest a fixed amount regularly, which can build significant wealth over time. SIPs benefit from rupee cost averaging, reducing the impact of market volatility. They also instill a habit of regular savings.
Education Planning
Plan for your children's education expenses early. Estimate the future costs of their higher education and create a targeted savings plan. PPF and mutual funds can be used to build this corpus. Ensure that the investments align with the timeline of their educational milestones.
Emergency Fund
Maintain an emergency fund to cover unexpected expenses. This fund should be separate from your children's future savings. It provides financial stability during unforeseen events without affecting your long-term goals.
Health Insurance
Adequate health insurance is essential. It protects your savings from high medical costs. Ensure your family has a comprehensive health insurance plan that covers major illnesses and hospitalisation expenses.
Regular Review and Adjustments
Regularly review your financial plan with a Certified Financial Planner. This helps keep your investments on track and aligned with your goals. Adjustments may be needed as your financial situation or market conditions change.
Teaching Financial Literacy
Involve your children in financial discussions as they grow older. Teaching them about savings and investments helps them understand the importance of financial planning. It prepares them for managing their finances responsibly in the future.
Conclusion
Sunil sir, your dedication to securing your children's future is commendable. By balancing term insurance, PPF, and mutual funds, you can create a robust financial plan. With regular reviews and adjustments, you can ensure their financial stability and educational needs are met.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
