Having a baby is one of the most unique and unexplainable feelings of delight for a parent. Even though your baby will give you sleepless nights and keep you running around the house, it is somehow worth everything. While your baby is the best bundle of joy in the world, it is also a huge responsibility for you to ensure their bright future. While you cannot predict every step of your child’s future, there are some ways in which you can safeguard their future by smart financial planning. In order to best prepare for your baby’s future, you should consider the following investments:
Take a Life Insurance
The most essential way to protect both the present and future of your children is to get a life insurance policy with a sizeable amount, considering your capacity to pay the insurance premiums. If you are already availing a life insurance policy you should also consider reviewing it and increasing the amount. The breadwinners of the house should be financially guarded due to their importance in sustaining the family for years to come. Regarding the life insurance policy, you should consider raising the amount according to your family’s current and future expenditure.
Plan for Long-Term Expenses
Higher Education or Foreign Education are likely expenses that might arise in the future. You might not have a clear idea regarding your child’s future needs right now, but higher education is a considerable expense that you will have to deal with at a later stage. Investment alternatives like PPFs and Fixed Deposits are most appropriate and profitable for a long-term use. PPFs are secured investment which offers attractive interest rates for a long-term investment. PPF investments have a minimum tenure of 5-7 years and you can also set the lock-in period for 15 years.
Fixed Deposits are a trustworthy investment pathway for both long-term and short-term investments. Fixed Deposits are a simple and trustworthy form of investments that is versatile in purpose. To get the most out of Fixed Deposit Schemes, you can ladder your Fixed Deposits by reinvesting the amount after maturity to consistently grow the funds for your baby’s future. Bajaj Finance Provides Fixed Deposits at 8.40% interest which can be set to a cumulative FD. You can also use the Fixed Deposit Calculator to gain an insight regarding the future benefits from your FD.
Secure A Health Insurance for Your Child
In case you have an existing health insurance coverage for yourself, you should consider including your newborn child within the insurance policy. It is advisable to do it the moment your child is born because in case some medical problems arise in the initial years, it can be a significant cost. Some health insurance policies also have the criteria for automatically including your newborn child, if you have claimed for maternity. During the growing years, it is understandable that your child’s immunity is still building up, and also the costs of consulting a pediatrician are higher than a general practitioner.
Plan for Short-Term Expenses
Education expenses are always rising. In order to provide the best possible education for your baby, you should immediately set up a short-term investment fund for school expenses. Investment options like recurring deposits and Systematic Investment Plans are your best bet to invest for a short-term (up to 5 years). Most lenders provide recurring deposit facility with a low starting amount and flexible period of investment. On the other hand, SIPs provide higher returns, but in most cases, you cannot withdraw the amount invested in SIPs prematurely. Both of these options are good for short-term investments because you can pay on a monthly basis to grow the corpus for your baby’s education.