Which Investment Options should I choose for my 3 yr old child future ?

POSTED BY gks ON June 17, 2014 6:44 pm COMMENTS (13)


I have been reading so much about investments and savings recently. I have contacted few financial consultants too but have not been satisfied about the various investment options they suggest as they are mostly biased to some company or the other. Now my question is assuming I save approximately 15k to 20k per month and I am a novice to term plan, equity or insurance policy etc

I have a 3 year old child and I am around 33 years of age.

1) what are the kind of investments I should make for short term and long term wealth creation

2) for child education

3) taking care of the family after death.

Thanks in advance.

13 replies on this article “Which Investment Options should I choose for my 3 yr old child future ?”

  1. gks says:

    Thanks so much Ashish.. you made me understand lot of things..wil pick up a eterm plan from LIC preferably because of the trust we all have built in it for the past years..

    1. Ashish Garg says:


      Now that you know a few things, share with others to help.


  2. Ashish Garg says:

    Step 1: read previous discussions / questions in this for and gain some knowledge about the areas where you are not aware presently (Term plan, equity, insurance etc.)

    Step 2: List down all possible avenues of investment, categorise them under risky and non risky.

    Step 3: List down your goals, time to achieve the goals and allocate money to be invested against each goals (portions in risky and non risky investment options)

    Once you are aware of the investment products, you can somewhat decide on your own as what is best for you.

    On the other side, some suggestions:
    1) What are the kind of investments I should make for short term and long term wealth creation
    For Short term, invest in non risky products such as RD, FD, Debt Funds etc
    For Long Term, you can choose to invest in risky product (subject to your understanding and risk taking ability) – Equity oriented MF, balanced MF, direct equity etc.

    2) For child education
    Invest in PPF and also look at Equity Mutual Funds

    3) taking care of the family after death.
    Take a term plan of sufficient amount which shall be good enough for your family to survive in case your absence (this can cover the household expenses, child education, child marriage and medical needs). Generally it should be about 12 to 15 times of your annual income.


    1. gks says:

      Thanks Ashish. that was a very detailed explanation and helped me understand better. I have a ppf account( assuming 1 lakh per year) which gives me 80 c benefits can I open one ppf account for my child and try to invest 1 lakh per year in it too with out any 80c benefits just because the money is locked and I get good returns? please advice.

      1. Ashish Garg says:

        I am not sure, but whatever information I have you can not open 2 PPF accounts even if you are guardian in one of them (as the case for opening for your kid and you being the guardian).

        You may look at opening another account in our wife’s name and invest 1 lakh there or open in your kid’s name and your wife being the guardian.


  3. Hemanth Chandra says:

    First, please take a term cover of sufficient amount so that it would be helpful for your family if something bad happens.

    For child education, cheout this article.

    For wealth creation, read articles by Manish on mutual funds.

    Let me know in case of any clarification required.

    1. gks says:

      Thanks Hemant, one basic question are term plans beneficial only for my family after any mishap to me or is it useful for me too after certain time.

      Can I consider insurance policies for health/ post death benefits or is it am good investment option to give returns..

      1. Hemanth Chandra says:

        Insurance is not an investment.

        There are lot of plans where you will get some money at the end of the policy if nothing happens to the insured person. All plans like these are of no use as the premium is very high and the returns from them are also very very poor.

        Term plan (which I have asked you to take) is something where the family get the amount if something happens to the insured person, if he survives in the period, they will not get anything. Here, the premium will be less and also the insured amount is very high.

        I repeat, insurenace is not investment.

        Don’t mix insurance with investment.

        There are a lot of articles by Manish in the main website. Please please go through them. Don’t invest in any product that you don’t understand.

        1. gks says:

          Thanks.. that gave a good idea to me about insurance..

          1. gks says:

            I have an insurance from LIC for 16 years where I pay for 12 yrs premium and every fourth year I get some money back. would you suggest me to go for any such policy again. also suggest some good( LIC prefereably or other) policy which give the best benefits for the insured’s family with low premiums

            1. Ashish Garg says:

              The policy you are talking about is a money back policy. In my opinion one should not look at such policy, though it looks attractive from outside that you will keep on getting money after some interval and then lump sum at the end, but they are not useful.

              Please understand insurance is a safety cover and not a great investment avenue. Assume you pay 30,000 per year (for 20 yrs) for an insurance policy that gives you a lifer coverage of 5Lakh and keep giving you about 1 lakh every 4th year and a lumpsum (including bonus on maturity). You will feel that you are getting 1 lakh every 4 year, which means you are getting 1 lakh against 1.2 Lakh paid. Now think that something happens to you in between, your family will get only 5 lakh + accumulated bonuses, will that be enough for them to take care for their future. I am sure your answer will be a BIG NO !!!

              Look at another scenario, you may 10,000 per year for a term plan and get a life cover of about 75L. You pay for 20 yers (10K x20 yrs – 2 lakhs). If you survive, you get nothing and if something happens to you, your family get 75 Lakh (does that sound GOOD !!!) Now invest 20K every year in some investment avenue, such as MF, Equity, PPF etc and see how much return you can get in 20 yrs. Overall you will realise you are better off if you go for option 2.

              Hope I am able to share some useful insights and not confused you !


            2. gks says:

              That was a lot of information Ashish. I feel I was a fool to take up the money back policy. Any suggestions on the LIC policy name which provides this good term plan. Also I understand that if I would want a better life cover I would have to invest more as premium for 20 years. correct me if worng. I am planning to put 1lakh per year into PPF religiously. Suggestions on good mF and Equitys please which are of lower risk..

            3. Ashish Garg says:

              Consider online term plan from LIC or any other insurance company you feel comfortable with. But only look at online term plan (these are cheaper than offline plans, as there is no brokerage to be paid to agents). You can search on net and compare various term policies by different companies, their premiums and period. Buy the term plan till the age you retire, may be 20, 22, 25, 27 yrs, as the case may be.

              For lower risk, look at Debt oriented Mutual funds. These are low on risk and better than FDs. For slightly more risk, you may look at Balanced funds. So much info is available in various questions asked here itself, else surf net.


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