Investment Planning for 3 month old Baby

POSTED BY sumedh ON November 20, 2013 12:48 pm COMMENTS (10)

Hi,

I’m regular reader of jago investor,& I’m really very much impressed with this site, it cleared lot of my doubts, thanks for making such informative site.

I’ve would like to ask regarding investment plan for child, I’ve 3 months baby & I’m want to start investment for him so that i can bear his study/misc expenses in future, before visiting this site i thought to go for LIC plan (Jeevan Ankur or kind of similar policy) but i read nice article written by Manish Chauhan & thought i should consult first, so please guide me what investment plan should i opt to ensure my child education & other expense is covered.

Thanks

10 replies on this article “Investment Planning for 3 month old Baby”

  1. rajkanwar321 says:

    Dear Sumedh,

    Your answer lies in the question itself. I agree with Ashal, mutual funds would be a very good investment option. As you mentioned you have gone through Birla Top 100; how did you find this plan? Is it beneficial and cater your needs in the long run. Remember always that mutual funds are subject to market risk so consult a financial advisor regarding the same. I also have a mutual fund from Birla Sun Life and I found their plans very helpful for me in the long run. You can consult with their financial advisor too.

    http://mutualfund.birlasunlife.com/Pages/Individual/Home.aspx

  2. rahul123 says:

    Hi Ashal,

    I read the information from following source –
    http://www.bemoneyaware.com/blog/ppf-account-for-minor-and-self/

    “For Minor Child(Child less than 18): if a parent invests in a minor child’s name, the income is clubbed with that of the parent who earns more. In some cases, a minor child may have a personal income, such as a cash prize in a competition or payments for commercials and events. However, this is rare and mostly it’s the parent who invests on behalf of the child. There is a Rs 1,500 exemption per child per year for the income earned by investments made in the name of the children.You can avail of this for a maximum of two children. This means, you can safely invest Rs 15,000 in a fixed deposit in your child’s name. If you have two children, that’s Rs 30,000 earning tax-free income every year. Opt for the annual payout option because the cumulative option will push up the earning beyond the tax-free limit in a couple of years as the compounding effect comes into play. Please Note: Either father or mother can open PPF account on behalf of his / her minor child, but both cannot open the account for same child.”

    I am searching more on it from the trusted source…

    Thanks,
    Rahul

  3. ashalanshu says:

    Dear Rahul, where did you get the info that PPF ibnterest is taxable if withdrawan before the D’ter in question turns 18?

    Dear Sumedh, please invest in Franklin India Bluechip and Quantum Long Term Eq. funds.

    Thanks

    Ashal

  4. rahul123 says:

    Open an PPF acount for baby and make sure that you will take full benefit of it by investing Rs. 1,00,000 per year (max limit), after 15 years, you will get around Rs 31,17,276 (Assuming current rate of interest 8.7%). The catch here is that, if you withdraw this money before your child’s 18th birthday, you have to pay tax on the interest. So plan it in such way that, you will get the amount after his 18th birthday.

    If it’s a baby girl- start SIP for gold (GOLDBEES), 1 unit per month is enough.

    Thanks,
    Rahul

  5. ashalanshu says:

    Dear Sumedh, on one hand you are asking for D’ter education need and now marking this investment (PORD) for home loan prepayment. May I know why there is a deviation?

    Regarding your D;ter please invest in PPF and MFs.

    Thanks

    Ashal

    1. sumedh says:

      Dear Ashal,
      PO investment is for shor term & I’m not considering this amout for my baby education, i want to to invest separately for her,i can invest upto 10k per month regarding PPF, i already have PPF account & I’m depositing 30k per year, regarding mutual fund can you please suggest which are the good funds to invest, i gone through idfc premier equity growth, birla top 100, please suggest whether this are good funds to invest or suggest some good funds.

      Thanks
      Sumedh

  6. ashalanshu says:

    Dear Smedh, OK. Let’s come to investment part. Why are you investing 10K in PO RD?

    thanks

    Ashal

    1. sumedh says:

      Dear Ashal,
      I’ve stared RD in PO last year as that time i thought it is safe short time investment option, after 5 years may be i use that amount to pre pay my home loan or keep some liquid cash, i haven’t decided regarding it depending upon situation after 5 years i will decide.

  7. ashalanshu says:

    Dear Sumedh, before any investment, what about protection for future financial life of your family, including your baby, in your absence?

    Thanks

    Ashal

    1. sumedh says:

      Dear Ashal,
      Regarding protecting plan I’m having term plan with coverage of 50 Lacs, also my wife is having term plan for 80 Lacs, & we’ve opted for mediclaim policy for 7 lacs (5 lacs from company mediclaim & 3 purchased from HDFC Ergo) which covers my baby also. also regarding investment as of now I’m investing in post office recurring deposit for 10k monthly.

      Regards
      Sumedh

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