Child Future Planning: The Complete 2026 Guide for Indian Parents

By
Hemant Beniwal
-
131
How Should You Plan for your Child Future Plan

Last Updated on April 26, 2026 by Hemant Beniwal

A client called me from Bengaluru three years ago. His daughter had just been born. He was calling not to celebrate – he had been reading about education costs and was genuinely worried. “IIM fees are Rs.25 lakh now, Hemant. What will they be in 18 years?”

I told him: at 10% education inflation (which has been conservative for top institutions), Rs.25 lakh becomes approximately Rs.1.4 crore in 18 years. He went quiet for a moment. Then he asked: “So what do I do right now?”

That is exactly the right question. And the answer is not a child insurance plan – it is a proper financial plan for your child’s future.

Quick Answer: Child Future Planning

The right instruments for a child’s education goal: equity mutual fund SIP (primary vehicle for goals 10+ years away), PPF in child’s name (safe, tax-free, complements equity), Sukanya Samriddhi Yojana for daughters (8.2% tax-free, government-backed, best safe instrument for girl child). Never buy child insurance ULIPs or endowment plans – they cost more and deliver less than term insurance plus equity SIP separately. Education inflation in India: 10 to 12% per year for premium institutions. A Rs.25 lakh goal today becomes Rs.1.4 to 2 crore in 18 years.

The first mistake: confusing insurance with investment for children

Every year, thousands of Indian parents are sold “child plans” by insurance companies. These are typically ULIPs or endowment policies marketed with emotional advertising featuring children’s milestones and parents’ anxiety about the future.

The return on most child insurance ULIPs: 5 to 7% over 15 to 20 years, net of all charges. The return on an equity mutual fund SIP over the same period: 11 to 13% historically. The difference on Rs.5,000 per month over 15 years: approximately Rs.12 lakh versus Rs.35 lakh.

What to do instead: Buy a pure term insurance policy for yourself (to protect your child’s financial future if you are not around). Invest separately in equity mutual funds for the child’s education goal. This gives you better returns, better cover, and full flexibility – at lower total cost.

Planning before the child is born

The window between marriage and a child’s arrival is a valuable planning period. Three things to address:

Health insurance with maternity cover: Many employer policies include maternity benefits, but the cover is often low. If you are planning a family, verify the maternity benefit limit and waiting period. Some policies require 24 to 36 months of holding before maternity claims are valid – so start the policy early.

Build a baby fund: The first two years have significant unplanned expenses – vaccinations, medical visits, equipment, childcare. Set aside Rs.1,000 to Rs.3,000 per month from marriage into a liquid fund or savings account earmarked for this. Do not let baby expenses derail your regular investments.

Assess your debt position: Before a child arrives, your EMIs (home loan, car loan, any personal loans) should ideally be under 30% of take-home income. A new child adds Rs.20,000 to Rs.50,000 or more in monthly expenses. If your EMI burden is already high, address it before conception if possible.

Instruments for the child’s education goal

Equity mutual fund SIP (primary vehicle): For goals 10 or more years away, equity SIPs are the right instrument. Rs.5,000 per month at 12% CAGR for 18 years grows to approximately Rs.40 lakh. Increase the SIP with every salary hike. Link the SIP to the specific goal – “daughter’s engineering college 2041” – so you never stop it impulsively during market corrections.

PPF in the child’s name: Any Indian resident can open a PPF account for a minor child. The parent manages it as guardian. Current PPF rate: 7.1% per annum, compounding annually, tax-free on maturity. The minor’s PPF account matures when they turn 15 (PPF has a 15-year lock-in from account opening). Excellent safe component alongside equity SIP.

Sukanya Samriddhi Yojana (SSY) for daughters: SSY is the best dedicated instrument for a daughter’s financial future. The 2026 rate is 8.2% per annum, fully tax-free, government-backed. Maximum deposit: Rs.1.5 lakh per year. The account matures when the daughter turns 21 (or earlier for marriage at 18+). SSY qualifies for Section 80C deduction under the old tax regime. For any parent with a daughter under 10, SSY should be part of the plan.

Avoid child ULIPs and endowment plans: High charges, low flexibility, returns that rarely justify the cost. A term plan for yourself plus equity SIP separately delivers more value at lower cost.

Have you calculated how much your child’s education will cost?

Education inflation in India runs at 10 to 12% for premium institutions. Most parents significantly underestimate the corpus needed. A RetireWise clarity call includes a goal calculation for your child’s education, alongside your retirement and other priorities.

Book a Clarity Call

Education loan: a tool, not a failure

Education loans serve an important purpose and should not be seen as a fallback for inadequate planning. They serve as:

A commitment mechanism for the child – when they have skin in the game, they approach education more seriously. The interest on education loans qualifies for deduction under Section 80E (for up to 8 years of repayment) under both old and new tax regimes. And a well-managed education loan does not have to burden the child for long if they enter a good career.

That said, education loans should be a supplement to savings, not a substitute. The goal should be to save enough to cover 50 to 75% of education costs, with the remaining 25 to 50% potentially covered by the child’s scholarship, education loan, or their own part-time income. A plan that assumes 100% education loan is exposed to interest rate and income risk.

The right insurance approach for your child’s goals

Never buy insurance in a child’s name for investment purposes. The child has no income – insuring their life has no financial logic. What you need to insure is your own life, since you are the income source that funds their future.

A term insurance policy covering 15 to 20 times your annual income, with your children as beneficiaries, protects their future better than any child insurance plan. The cost comparison is stark: a Rs.1 crore term plan for a 30-year-old costs Rs.8,000 to Rs.12,000 per year. A child ULIP of Rs.5 lakh cover might cost Rs.50,000 per year with inferior returns.

Retirement planning is also child planning

Here is the most important and most counterintuitive point about planning for your child’s future: the best thing you can do for your children’s long-term happiness is to retire financially independent.

A parent who is financially secure does not become a burden when they age. They do not create pressure on their children’s careers or marriages. They can help grandchildren without drawing down their savings. And they model the financial discipline they want their children to develop.

Never raid your retirement corpus for a child’s education. Education can be partly funded by loans. Retirement cannot.

Estate planning and documenting your wishes

If you have children, write a will. This is non-negotiable. A will ensures that if something happens to you, your assets go to your intended beneficiaries – not to distant relatives by intestate succession rules. It should specify who manages the assets until your children reach adulthood, how insurance proceeds should be used, and how education goals should be funded.

Consider a trust structure if your estate is significant – this provides professional management and protection against the assets being dissipated before the children can use them wisely.

Also read: Cost of Higher Education in India 2026: Why It Is Your Retirement’s Biggest Risk

Frequently asked questions

What is the best investment for a child’s education in India?

For goals 10 or more years away, equity mutual fund SIPs are the primary vehicle – historically delivering 11 to 13% CAGR over long periods. Complement this with PPF in the child’s name (7.1% tax-free, government-backed) for the safe component. For daughters, Sukanya Samriddhi Yojana (SSY) at 8.2% tax-free (2026 rate) is the best safe instrument. Avoid child insurance ULIPs – they deliver 5 to 7% net of charges, which is significantly below equity SIPs, while costing more.

What is Sukanya Samriddhi Yojana and should I invest in it?

Sukanya Samriddhi Yojana (SSY) is a government savings scheme specifically for girl children. The 2026 interest rate is 8.2% per annum, compounding annually, fully tax-free. You can deposit between Rs.250 and Rs.1.5 lakh per year. The account can be opened for girls up to age 10 and matures when the daughter turns 21. SSY qualifies for Section 80C deduction under the old tax regime. It is the best guaranteed-return instrument for a daughter’s long-term financial goals and should be part of every plan that includes a daughter.

Should I take an education loan for my child or save for education?

Ideally, save to cover 50 to 75% of expected education costs and use education loan for the remainder. Saving entirely provides maximum flexibility. Education loan provides Section 80E tax deduction (for up to 8 years of repayment) and creates financial accountability for the child. Never deploy your retirement savings for education – retirement cannot be funded with loans, but education can. The worst scenario is fully depleting retirement savings for education and becoming financially dependent on the child in old age.

What instrument are you currently using for your child’s future – and at what age did you start? Share in the comments – early starters can inspire those who are just beginning.

131 COMMENTS

  4. Good Morning Sir
    Thanks For urs valueble Comments on Savings Specially for Childrens, my question is,
    In which bank can i open my PPF Account, and what its term & Other condition

  5. Dear sir, this article published in year 2011… i request you to update and publish one new article as on today 2014… (maybe no big change..but sure there will be some new plan too…)
    Thank you,

  6. Hi,
    This is really a nice article. Am concered about PPF and Term Insurance and already have it. Also I have started investing in MF.

    In this article you have mentioned to “Trust for major son”.
    What is a trust and how it works? How can I start it ? I have a small kid but I want to have the idea how to go for it ?Please write in details.
    Thanks.

    • Tikini,

      Its difficult to write about trust in few lines. It is a different entity and a structure where you ensure the assets you have built for your family are utilized for their benefit.
      You can schedule a discussion.

  8. Dear Hemant

    Thanks for such an informative article.
    My son is turning 2 yrs soon and I guess I should now start planning for his pre-school and other expense in various life stages. By now , I have got a term plan & health insurance with adequate covers. However, for his direct expenses there is no investment that have been made by now.

    Please advise which instruments are best suited for his schooling , college and marriage expenses. Mutual funds or Child plans or any other ?

    • Sachin,

      With mutual funds you can create a good investment portfolio. The benefit of this avenue is that you can have a mix of different categories from which you can create a well diversified portfolio. Apart from this PPF is also a good investment avenue.

  9. Good post however , I was wondering if you could write a
    litte more on this topic? I’d be very thankful if you could elaborate a little bit further. Thank you!

  11. Sir,

    I have a son 14 years studying in Class VIII. Unfortunately, due to less salary / high expenses / jobless, I could not able to make any major savings. Recently I have opened 3 RDs, monthly deposit 3000/- since last 01 year. I am having HDFC Young star opened in year 2007, but that has also lapsed as there is no ECS debit by HDFC Bank from my saving account since 2011. Due to this now I am going to close this by which I will get approx Rs. 90,000/- whic I want to invest for my son studies.

    I need good amount of money after 4 years for my sons admission in B.Tech., next amount after 4 years for his MBA and later for his mairrage.

    Pls suggest me good high interest, tax saving, safe and secured, saving scheme short term and long schemes, to fullfill my requrements. Presently, I can save Rs. 30,000/- per month.

    With Thanks & Regards

    Raj Kumar Gupta

    • Raj Kumar Gupta,

      The return and risk in any product have a direct co-relation. Products which offer you high returns also carry high volatility risk with them. You can reduce the risk by giving longer time horizons to your investments.
      You have a 4 year horizon for which high risk product like equities are not suitable. You will have to consider debt instruments wherein the returns will not be too high. Also taxation of returns will have an impact on your earnings.
      Ideal is to identify the amount you need and then evaluate where you can invest. If there is a shortfall in meeting your requirement then you will have to look sources for the same.

  12. Hi Hemant Sir,

    Can you suggest any child plan which offering good benefits for single premium i want invest for my kids aged 5 and 3

    • Syed,

      Child plans are costly and to accumulate for the required goal you will have to contribute higher premiums. The ideal means to plan for your child is to keep insurance and investments seperate. Identify what you will need for your child and then evaluate investment option.

  13. Great Article, Read each and every comment too 🙂

    In short, split your money with SIP and PPF for long term investment and do not look for any “child” word in savings..

  14. by oversight i reached this blog & read children education. Very nice article. May be its very old article. But much useful. I have 2 kids, daugher – 10 years & son – 7 years. Every month school fees & music class fees goes around 7000. you can guess other expenses about kids. Other than this expenses, how much should i save for them.

    i would like to get proper plan, by which email id i reach you?????

    Thanks for the article.

  15. Dear Hemant Ji,

    Yes, your article is really helpful for a person like me who just buys the insurance and other things without any planning.

    I like to inform you that I have a son ( 2 years old right now) and I live in a joint family.

    Can you pleas educate/suggest me for my investments/planing. Let me furnish you what I have done so far :
    1) LIC policy of 7 Lacks (20 yrs. plan which will fetch around 13 Lacks if I don’t claim for quarterly bonus). -Rs. 3215/- per month
    2) PPF of Rs 2000 Per month
    3) ING Vysya plan – Name- FLA- fetches me 13.5 L by next 16 yrs.- Rs. 3115/- per month.
    4) HDFC Ergo -per month Rs. 2000/-
    5) Purchasing Gold of Rs. 5000/- per month- For fixed period of 15 months.

    Now, can you please suggest whether my primary goal of :
    1) My son’s graduation education by year 2030 is safe or not
    2) My retirement is unsafe, I know, so please suggest.

    • Dear Mr.Shivram,

      The best strategy for your child planning is to keep your investments Simple. Look for term insurance for protecting the child goals.Have an asset allocation approach for investments wrt. the horizon for your child requirement and your retirement. You can choose products only when you are aware abut your requirement and know the risk return characteristics of every investments.

  16. Hi Hemant,

    I am warking as Network adminstrator in a private organisation, i am earning 15000/- gross net is 13760,alrady i hve taken one LIC Jeevan Anand insurance plicy one year back 18 years plan 6months 1,00,000 Lc plicy for me, i having 3 months baby and i have take care of my mother and father.i am leaving in Hyd in rental home, i have to invest 500 to 1000/- permonth for her carrier what is best way for me can give guidence.

  17. HI !

    THIS IS A VERY USEFUL ADVISE FROM YOUR PART. MY WIFE IS EXPECTING & I AM TRYING TO PLAN OUT THINGS BEFOREHAND. YOUR ADVISE TO NOT TAKE INSURANCE POLICIES IN THE NAME OF CHILDREN SEEMS VERY TRUE. WE DO NOT WANT THEM TO PAY PREMIUM IN CASE OF ANY CASUALITY… IT SHOULD BE IN THE NAME OF PARENTS. I WOULD BE OBLIGED IF YOU CAN WRITE ME ANY FURTHER TIPS ON CHILDREN’S FUTURE PLANNING AS WELL AS RETIREMENT PLANNING.

  18. Dear Hemantji,

    I have found your article of immense use to me. Many thanks. Please tell me if you could guide me about my case:-
    Age: 49 years
    Daughter : Born 3 months back
    Married : 2 years back
    Finacial Planning So far: Practically Nil.( Used most of my earnings in travels abroad)
    Future Planning : A must now.( for obvious reasons)
    Profession: Government Service – supervisory level ( During postings abroad , we earn more)
    Present assets : A 2 bed room flat in NCR and a 200 yards land in Indraprastha Ghaziabad ( through lottery)- No Debts.
    Garateful if you could kindly suggest some financial plan for investments for me and my family ( my wife not working)

    Yours sincerely
    Suresh

  20. hi hemanth,
    i have one daughter 6year old and new born son 6 month
    i have one policy for daughter.komal jivan premium.16000.p/a
    kindly suggest for long term investment .i need 50lac after 20years.
    and best child plan for 6month born son.

    regds
    kripa

    • Dear Kripashankar,

      Child plans have initial cost very high since they try to provide higher life coverage and have inbuilt features like waiver of premium, payment of premium by the company etc. Also, liquidity and transperancy is a major issue when it comes to fund underperformance.

      Keeping it simple and a term insurance +MF combination will help you in planning for the child effectively. However, you will have to create a good discipline wrt MF investments and not to withdraw in case of any fund requirement for other goal.

      Read here to know how you can plan through Systematic Investment
      in MF-

      https://www.retirewise.in/2011/02/systematic-investment-plan-mutual-fund-sip-best.html

  21. Hi hemanth,
    hi have a nephew of 2 years and we are planning to have some good investemest for his future education, his parents annual inccome is 2lak p.a so please suggest me a better investment plan

  22. Dear Hemantbhai,

    I have a doughter of 2.5 years, I want to invest for her but not found good child plan. Kindly advice for investment which will use full for her education as well as marriage.

    Waiting for your reply.

    regards,

    Narendra Gupta

    • Not sure if you read the 9 points under long term goals Hemant wrote in this article.
      The best way for child’s long term goals is to invest in PPF, Equity MFs and gold. There is no such thing called “good child plan”.

  23. Respected Hemant,
    Good evening,
    Before surfing / reaching to your site, today i decided to invest in following Plans of LIC, But after reading all this i think God saved me as i got this web, so Please have a look at it and give me some idea

    For my Son of Age 3 Yrs 6 Months
    Jeevan Ankur: SA 5L: Premium 24354: Term 18Y: Matu Amt: 905697
    Child Future Plan: SA 5L: Premium 32809: Term 15Y: Matu Amt: 1010000
    Child Career Plan: SA 5L: Premium 31975: Term 15Y: Matu Amt: 860000

    For Me (My Age is 33Yrs)
    Jeevan Saral: SA 5L: Premium 24020: Term 35Y: Matu Amt: 4604000

    For my Wife (Age is 33Yrs)
    Jeevan Saral: SA 5L: Premium 24020: Term 35Y: Matu Amt: 4604000

    My Current Insurance is LIC’s Plain Term Insurance Plan of of 2300000 is running, No other Insurance policy

  24. Hi Hemanth,

    Great, There is true site for Financial planning… Thanks to you.

    I am 32yrs I took already LIC jeenan anand, paying nearly 12000/yr,
    I read the article, I would like to go for term plan insurance investing atleast 20,000/yr which helps my family, health and 2 child’s plan.
    I’m confused of all insurance companies. Name the insurance plan and company where i can invest.

    Truly helpful.

    Again Thanks

  25. my son is just completed his 1 yr , and we are planning to have some good insurence plan for child future viz for education but we are are totaly confused , we are planning to invest in a good LIC child plan . can you suggest which plan is best to invest in .

  26. Dear Mr. Hemant,

    Alas, I too am a late entrant to your wonderful guide. Coming to the focus point.

    I am 34 yrs old working alone in my family. I have a 1 year old daughter and I am still grappling to open up savings for her.

    What you told about PPF is definitely a good idea. What I have done is whatever monetary gift we have received is made as a FD with 10% returns under my father’s name who is a Sr. citizen. Also I have opted for a RD of 5K for about 15 months which also yields 10%.

    Having said this what do you think is an optimal solution to saving and increasing the net worth of that savings till she grows up.

    Your response is highly appreciated.

    • Hi Amit,
      It looks you are doing eight thing but must consider taxation in case of RD & estate planning in case of investment in name of father. You must have some equity exposure through mutual funds as it is a very long term goal.

  27. Hi Hemant,

    I read your article and found it very helpful. I’m 32 years old and have a 17 months old son. I’m a single parent and earn around 65,000 monthly. My husband doesn’t even contribute a single penny towards my child’s maintenance. I stay with my parents and have recently finalised a home. My EMI would be approx 28,ooo. I plan to put my flat on rent for some time. My annual investments are as follows
    PPF – 15,000
    LIC ( Jeevan Anand) – 11,000
    ULIP – 35,000
    LIC for my son – 45,000
    Infra St. Bonds – 20,000

    I also created a recurring deposit of 10,000 monthly to save for my son, insurance premium payments or at times it even helps in force savings. Somehow, I feel the need to invest my money smartly so that I can reap more benefits and plan a better future for my son at the same time taking care of expenses. I’m hoping to take some good tips from you on investment, esp keeping in mind the fact that I’m not too well versed with financial instruments.

    Greatly appreciate your advice.

    Thanks
    Ragini

  28. Dear Hemant,

    I have taken LIC Komal Jeevan for my daughter.

    Policy Start Date : 14-Nov-2011.
    Premium Paying Years: 18
    I am paying 3137 Monthly premium

    Is this a good policy for my daughter. Or should I go for some other policy. Should i continue this policy or should I surrender ?

    Brgs,
    Ashok Kothari

    • Dear Ashok,
      As you have just started the policy – surrendering or making it paid up will only be possible after 3 years. But as you are paying monthly premiums there is a touch decision that you take – you can immediately discontinue the premiums but in this case you will lose the premiums that you have paid.
      I am not making any suggestion – you can discuss this with your agent or some other advisor.

  29. Dear Hemant ji,

    My self 38 and wife 36 we both are working and our monthly income is 75 thousand and I have a 14 years old son.
    Till date I have done some regular investment and some SIP but still I fell I have do lot for my old age and child good life.

    1 2 3 4 6 7 8 9 10
    # Name Company Name Policy name Risk date(Starting date) Maturity date No. of Yrs Premium /Investemnet to pay Sum Assured (Rs.) Yrs. Premium Paid (Rs.)
    1 Janet M Solanki (36 yrs) LIC 14-21 15/10/2001 15/10/2022 21 50000 2356
    2 LIC Jeevan Saral 28/02/2007 28/02/2042 35 125000 6005
    3 LIC New Bima Gold 08-11-2007 08-11-2027 20 200000 7363
    4 LIC Jeevan Anand 28/06/2008 28/06/2028 21 115000 6191
    5 LIC Jeevan Sathi 14/01/2009 14/01/2039 30 500000 23450
    6 LIC Jeevan mitra 28/05/09 28/05/2030 21 300000 16782
    7 LIC Jeevan Saral 24/11/09 24/11/30 21 125000 6005
    8 LIC Market Plus 28/6/2010 28/6/2035 25 100000 24000
    9 BoB -PPF PPF 2009 2024 15 0
    10 ICICI -MF Taxplan growth 31.3.2010 31.3.2013 10000

    11 Medi insurance Persoanl
    12 Home loan EMI 20 (180000 annual)

    1 MahendraSingh V Solanki (38 yrs) Tata AIG Life Tata AIG Life Investassure II (110L048V01) 39763 10-11-2038 30 360000 12000
    2 LIC Jeevan Saral 28/03/2007 28/03/2042 35 125000 6005
    3 LIC* Jeevan Sathi 14/01/2009 14/01/2038 29 500000
    4 LIC Market Plus 28/6/2010 28/6/2035 25 100000 22000
    5 SBI -PPF PPF 2007 2022 15 0
    6 Kotak-30
    SIP-MF(Rs1000) K-13,Kotak 30 Equity scheme growth 21/11/09 .Nov-2024 14 0 12000
    7 Tata -SIP
    (Rs.1000) Inf.Fund Growth 21/03/08 .March-2018 10 0 12000
    8 Sundaram
    SIP-MF with tax ben.(2000) Tax saver open ended fund growth-14 14/12/09 20.Jan-2020 10 0 24000
    9 Rim Growth 19.04.10 19.04.12 2 12000
    10 Rim Growth Tax saver growth April-10 .May-11 1 0 0
    11 IDFC Growth May-11 May-12 1 0 12000
    12 HDFC Top-200 June,11 May,16 5 12000
    13 Kotak Gold June,11 May,16 5 0 12000
    14 DSP Black Rock 12000

    1 Malcolm (14 yrs) Max Smart Steps plus(unit linked) 31/12/2010 31/2/2023 13 250000 20000

    I have shared this sheet to so many Financial planner but all say u have to close this and start new one (What plan they have) so pls guide me I am in correct path or I have to change my profile.
    I can invest 3-4 thousand per month up to five yrs. so pls suggest me more investment plan.

    Regards
    Mahendra Singh

  30. Hi Hemant,

    What a lovely article you have written, thanks for eye opener. Since few days i was also looking for children plan but now definitely i am not going to go for it. I need bit advice from you, will be really thankful if you can suggest. My age is 26 and i am going to become a father in 15 to 20 days. For the PPF account you suggested i already hold one and deposit money upto their max limit, and from this year we can put 1,00,000 into PPF, i am planning to open another account for my child’s future might be on his name or under my Wife’s name ( i am not looking for tax saving on that). Now in what more funds do you recommend i should invest, i am going to buy a term plan soon as well (admired from your article) I also hold Life insurance policy of 30k a year and another SBI saving plan policy 20k a month.Please suggest me how do i head start investment planning for my coming child.

    • Dear Naid
      First of all congratulation for a new member in the family & I must admit kids changes your whole world especially financial. 😉
      Buying a term plan is a very good decision at this stage as financial responsibilities will be at peak & it will of great help to your family in case of any mishap.
      But I can see that almost all your investments are in debt & you are planning to further increase by opening another PPF account. PPF is a great instrument for debt investment but looking at long term horizon of your goals you should think for equity related instruments. You can invest in diversified mutual funds – read this
      https://www.retirewise.in/2010/08/understanding-mutual-fund.html
      You are contributing more than Rs 2.5 Lakh in insurance policies – my suggestion is you should evaluate these polices so that you will not get any shock at maturity of these products.

  32. Hi Hemant,
    Thank you very much for forwarding this article link.
    I was very much confused about investing for Child’s future.

    Need your help in below points. My current Age is 30 years and monthly take home salary of 40,000/-, Home loan emi 14,000/- for next 20years, 10 months Son.

    1. I have 2 LIC policies having yearly premium of 22,000/- and covering just 3,00,000/- sum assured. Could you please advice about do I continue with this or close. I want to start the Term policy of at least 50 Lacks.

    2. From which institution I should buy term policy ? There r some private institution like Bharti/Axa, ICICI Prulife, HDFC Life which provide with less premiums compared to LIC. Please advice.

    3. PPF or balanced/equity fund SIP of 2000/- per month for Child future needs? IF equity, then please advice some best MF for long term 10 – 15 years.

    4. I have stopped my previous SIP’s and started giving lump-sum amount against my home loans from last six months to reduce the principal amount. Is it fine or I should start one more SIP of 2000/- pm.

    Will be waiting for your reply.

    Thanks

    • Hi Sachin,
      Child future planning is a big goal & I can understand your confusion.
      You have not shared your name of your insurance policies but looking at premium to sum assured ratio they should be endowment plans. Surrendering is not an easy decision in endowment policies as in early stages you hardly get 40% of your premiums back after surrendering. Paid-up is another option but will suggest sitting with your agent or some other advisor & analysing your policies.
      Term plan is a great decision & you should immediately take one – you can consider HDFC & ICICI from the names that you have mentioned.
      I am not sure about your overall asset allocation but you can start your SIP in equity diversified funds – you can start with HDFC Equity & DSP BR Top 200 Fund.
      Prepaying a loan is not a bad idea but looking at tax benefits in home loan real interest rate is bit lower but you should take the decision depending on your spending habits & your experience with investments.

  34. Dear Hemant,

    I am 35 year old and my income is 20,000/-p.m.
    I have daughter of 8 months.
    I invested in LIC 13000/- yearly.
    I have PPF A/c and invested 1000/- p.m.
    My monthly EMI of 8000/-p.m. for purchased of house property

    Pls suggest me sutaible investment plan for my daughter and pension plan for me to get benefit after retirement.

    • Hi Nilesh,
      I will suggest you to start SIP of Rs 500 pm in HDFC prudence fund. Try to learn more about personal finance asap.

  35. Excellent!

    All the points are written considering the current scenario of the urban families.

    Indeed raising a child is not a child’s play. So to lighten at least the finanical responsibility involved in this I have decided to start investing through SIP for the children’s education & marriage. At present I’m 26 & single.

  36. Hemantji,
    Your articles are very useful and informative for persons like us who do not know ABCD of investment. Im a regular reader of your articles. thanks for that and hope for more important articles on fundamentals of investments
    with regards,
    Suresh

  37. Hi,
    I stumbled upon your articles, when I was searching for Jeevan Ankur policy from LIC. Then I read most of your articles. They are an eye opener. I have made lot of mistakes in investment because of lack of knowledge or Ignorance. I have few queries for you.
    1. My wife is an working professional aged around 33 yrs. we havn’t taken any retirement policy till now. Kindly suggest what to look for while buying them.
    2. I took a HDFC young star plus policy in 2008 for my kids education planning. But I am not happy with the performance. So kindly suggest which other ULIP is better?
    3. If I have to invest one time amount say 1lakh for my kids future, what’s the best option? (Note: I am not looking for Tax Benefits.)
    Hope you will help me out.
    Thanx in Advance.
    Prasad

  38. Hi Hemant,
    I am new to this site and I wish I had known about this site ealirer. I have already shared the site details to my friends as well. I am of the opinion that your views/advise are unbiased, sincere, easy to understand and more importantly you show patience to answer all type of queries. Thank you.

    I have a question, but before that a bit of a background. Me and my wife are both 40 yrs old. We work in IT and my wife plans to retire by 45. I am not that lucky. I have 2 sons – 10 yr old and 2 yr old. We have two PPFs a/cs (in my name and my wife’s name) into which I have been depositing 140K each yr. Both a/cs will mature in year 2015. I have high premium insurance a/c LIC Jeevan Mitra policy which will mature in another 18 yrs. I am a regular investor in Mutual fund SIPs for last 2 yrs and also have HDFC child plan regular SIP for my first son. For my 2nd son I have recently taken up LIC career plan with over 12K monthly premium. I have fairly good corpus through PF/VPF and also have cleared my 2 housing loans.
    Please review the above and suggest investment schemes to secure my son’s education and also for my (& my wife’s retirement life).

  39. TERM PLAN- how term plan are good? suppose I am 33 years old and I buy a term plan of 25 lacs foe the term of 30 years which is I suppose maximum in any case and when I turn 63 I will be left with no cover at all, or do you know any company that can provide life cover at that stage with same premium band.
    don’t you feel like whole life plan is better option from any private player which will also ensure return of premium and cover till 100, also I can avail loan on such plan after 3 years.

  41. do u think ppf will beat the inflation in long term and will help in child future plan.
    why in your any of the articles you don’t recommend insurance plans, now let me ask are you a mutual fund or a post agent?
    I hate LIC as an institution, it is a life insurance ( investment and returns are alien words to them) driven with only death benefit components as there features.
    with the intervention of Irda certain charges have drastically come down and places best bets in long term horizon, and have more versatility as compared to mf or others. I hope u can recommend plans from private players with good track records .

  42. Thank very much Hemant ji,
    Is the term plan for my son? But he is a minor.
    For me? I m already 48 years old, still should have term plan?
    Your advice is so valuable to me and others hope you can feel it.
    Regards and all the best

  43. I invested 25000/- annualy in LIC wealth plus. I already paid two premium and one premium is balance.. but as today market situation wealth plus NAV 8.9. so pls. suggest what can i do??
    is my investment is wrong?

  44. Hemant ji,
    After considering many factors about children future, I came up with a plan.
    First I have to secure my future , ie, my retirement and the future of my better half after me, so that she does not have to be dependent on my son.
    I feel that is the best plan I could get for my son, not to be dependent on my son and to give him a life with no burden at all from my side.
    Being from a middle income family and keeping in mind the inflation
    It seems that no money or plan is enough to secure the future after retirement.
    Still I would do what it take to give my son a burden free start in his life.

  45. Hi Hemant

    I am happy i have across your article.I have twin daughter who will be turning 2 this jan. i have been reading your site for past 2 days i have made lot of mistake including child plan.I would rectify it soon. Continue Dancing

    Thanks
    Deepesh

  46. Hi Suman
    Instead of looking for a Child Plan I would suggest you to start SIP in a balanced fund like HDFC Balanced Fund.

  47. Hi Hemant ji,

    I am Suman. Can you please suggest me best Children Plan for my daughter future secure. My daughter age is around 1.9 years. What ever you suggest I will go with that. I wish to give best secure future for my kid.

    I am a middle class family only. I want to be a best father of my child.

    I am planning to pay 2000/- per month. Please suggest best plan for my kid.

    1. ICICI Prudential Smart Kid New Unit Linked RP
    2. Birla Sunlife Children’s Dream Plan
    3. Aegon Religare star Child
    4. HDFC SLIC Young Star Super
    5. Kotak Headstart Future Protect

    Thanks,
    Suman

  48. Hi Mr Hemant,
    very recently I have subscribed and am really “growing wise” with your views and articles. I am also a stauch believer of SIP in mutual funds and have a quite a few of them . There is one query if you can reply , my daughter is 2 and half years and last year only i have purchased a TATA AIG Mahalife gold for her . can you throw some light on this decision ? will it help in some way ?

  49. Dear Heamnt,
    I ve read your child career plan.This is the first time someone advice me in such way.Many many thanks.I have a daughter of 5 yrs 9 months old.I am working,my wife is a homemaker.Now I am expecting your kind advice in the following cases of my savings/investment:
    1) I have a policy of LICI viz. JEEBAN CHHAYA for 20 yrs starting from 2006 and other one is CHILD CAREER PLAN for 23 yrs from 2006.
    2) I have a JEEBAN NIDHI pension plan from LICI fro 22 years starting from 2007.
    3)I have purchased only 7 gms. 24 carat gold from AXIS Bank.But my relatives told me that I could not sold it in the market or I could not make profit by selling it in future.
    4) I didn’t understand what you told about TRUST.

  50. Dear Hemant ji,

    I want to invest to get both short term and long term returns. As of now i have got a LIC Jeevan Anand for myself. I was thinking to invenst in Mutual Funds or SIP. please advice what should be done if i need good amount of money after 3-4 years and then after 15 years.
    My Age is 37 years and have a 3.5 years old daugter and we are also planning for second kid..
    regards

    • Hi Rahul
      For short term invest in debt like bank or post office deposits. For long term invest in diversified equity mutual funds.

  51. Hi Hemant,
    I read this article more than 3 times, because it should register my mind for my Child Future Plans. Thanks for your Great work.

    Regards,
    Sairam

  52. Hi Hemant,

    excellent writeup. I am one of the beneficiaries of people of your kind. I almost bought the ICICI Smartkid Maxima plan for my newly born daughter, bowing to the pressure exerted on me by my wife! You’re right in saying that these products actually play with one’s emotions. If the planning is right, all the goals can be met with proper planning, without the need of any specialized products.
    I found the “trust” for my daughter funda quite useful. Can you give a short guide of how to go about it?

    • Thanks Sumeet.
      Trust is a very detailed & complex thing – should be done under guidance of some professional. Will try to write some post soon.

  53. Hi hemant i’m 33yrs old married person pl suggest some policies with maternity benefits which covers infertily treatment also

  56. Where is equity? Isn’t equity best instrument to be in as far as long term is concerned like planning for child education/marriage? I am not advocating that a newbie investor just rush to stocks/aggressive MF without looking into the facts first, but there should be a place for equity for such planning. How many people know that a balanced mutual fund, managed by competent fund manager has given 3x return compared to PPF since its inception? Indian economy is on good growth path and will keep the trends at least for several upcoming decades, so equity will grow in sync with it which definitely will outpace traditional debt products in longer run. Risk factor in equity is reduced greatly when we go long and by using long means 10-15 years here. But again, I am not saying don’t look at PPF at all. It’s one of best products available in dept category. It would be a very good idea if large part of your allocation go towards Equity and remaining towards PPF in a long term plan.

    – Jagbir

    • Hi Jagbir,
      I think you missed point no. 2.
      Our views are very similar when it comes to equity. I have already wrote so many articles on equity as best asset class in long term – almost 10-15% of my article highlight this thing. 😉
      This time I thought let’s talk about other important things. Waiting for your reply.

      • Yah Hemant, might be I hit submit quickly but again I gone through article and getting sense that major stress is on debt side. There may be people who haven’t gone through all the other articles where you highlighted the importance of equity, therefore, may not get complete sense. It might be a good idea to make each blog post complete in itself and stress on good points which may already be repeated several times in earlier posts.

        btw, on lighter side, once I sit and wrote complete list of goals like kids education, marriage, retirement, property purchase, car purchase, foreign vacation and all blah blah, found that it’s too cumbersome to keep track of these. Initially due to overflowing enthusiasm you may starting tracking each and every details but for most people, that interest lost happen very quickly and they get back on the same old track. It’s a good idea to have a planner who take care of such stuff or if you believe you want to manage it yourself then stick with a good one equity/debt portfolio, pool your savings in it and withdraw when needed. One amusing thing I noticed with several people that they bother too much about planning kids education.. you may calculating cost for MBA/IIT and kid may go for entirely different track like musician/writing/painter or whatever, then what would you do? ok, shift excess money, if any, to another goal but why to bother for it for so long years at first itself when you are not very sure about outcome? Another cool goal is marriage, remember we are talking about time.. 15-20 years later when society may change drastically and one fine day you may find that your beloved kid grown up and already married to lover last year or may like to live in ‘live-in’ style for next 10 years 😉 so why dig your mind for estimated cost when things are not very certain? Isn’t it worth to create a big pool of fund and take pieces from it as and when require? Everybody has different taste and quite possible whatever mentioned here suits only me. 🙂

        – Jagbir

        • Hi Jagbir
          I tend to agree with most of what you have said.I have brother and sister who are American citizens.They and their kids visit us regularly and interact with my daughter who is in college now.By our standards kids of my brother and sister are of marriageable age but none of them has married so far.Whenever my mother asks them about their plans to get married, they tell her politely not in near future.My daughter is no different.She decides about the type of education she wants.I am sure she will take a call as to when and how she wants to get married.
          But the fact remains that good education is very expensive and all parents want to provide the best for their kids and money is some thing which you require in all stages of life.Hence there is no harm in planning to get wealthy.I think all kids appreciate gifts from their parents.

        • Hi Jagbir
          The type of portfolio we construct for ourselves is mainly decided by the goal.No meaningful portfolio can ever be constructed in the absence of a clearcut goal.I am sure no big pool of fund can ever be created if we do not have any direction and mindlessly keep on withdrawing money from the pool as and when needed.Wealth creation without proper financial planning is just not possible.

          • While I agree with you that a meaningful portfolio should have clear goals. That’s absolutely fine. But did I mentioned anywhere that we should do mindlessly withdrawal or shouldn’t have goals at all? Nope. What I am trying to pointing out is that there are some goals (at least for me) which I just can’t state in “clear cut” fashion such as child education or marriage. I’d rather prefer to take an education loan for my child which will help me on tax front as well as keep my kid more motivated because he has to pay the loan after completion of education, instead of keep worrying for 15 years for an amount which may fall short or exceed from actual expense. I’m comfortable to pool money in my retirement portfolio kitty and withdraw the “sensible” amount from it as and when needed. I can better track performance/allocation of this portfolio than creating numerous others just for sake of different goals. I have very clear requirements for my retirement and can comfortably align other goals with it where I don’t have clear direction with them. There are certain goals like purchasing a car, property for which you can perfectly guess the required corpus and allocate funds.

            Without going too much into planning, I try to maximize my saving rate from my income and invest the amount in instruments based on my risk profile. At this moment, without jeopardizing decent living, I am able to save more than 50% from monthly in-flow and this is simply not possible without carefully and continuous planning/tracking.

            Hopefully we are on same boat about planning but I am against to “overdo” it. anyhow, on lighter side again, who am I to decide? there’s people who won’t get convinced with “simple” solutions and always suspect that if they are able to understand things so easily then there’s something wrong with it. They need fair complex instruments going over their head to believe and relive that they are heading to a right direction. 😉

        • Hi Jagbir,
          Thank God you said “on lighter note”
          Retirement is far more important simply because if there is NOT enough money you’re headed for welfare or worse! Put your own oxygen mask (in airline) on first, then you can assist others (your children) who may not be able to assist you.
          Just to add there’s nothing in the Bible/Geta that says you have to pay for your kids college or marriage but still we can’t ignore these goals or run from our responsibilities.

  57. Dear Hemant sir,
    My query pertains to investment in PPF:
    If I deposit say Rs.70,000/- into my own PPF a/c at State Bank of India, it is obvious I can claim tax-rebate for this.

    Now can I deposit say another 70,000/- into my minor daughter’s seperate PPF a/c held in the same branch of SBI??? (I do not wish to claim any tax-rebate on this). But will she be entitled to the interest on the amount invested in her a/c?

    My investment agent says “maybe 15 years down the line the bank may refuse to pay interest on investments into her a/c”. He is of the opinion that the “total investment” should not exceed 70,000/-.

    Is there any way around this quandary.

    kindly advise.

    • Hi Raj,
      You should not/can’t invest more than Rs 70000 in your own account and in the account of your minor child. (in a financial year)
      But it is important to understand that any income over and above Rs 1500 by a minor child will be clubbed in parents income – so one should invest kids money in either ppf or equity where returns are still tax free.

  58. Hi Hemant
    Better late than never.After reading your article, I have a feeling that I have been late in planning for my daughter.Even though I am late,I have decided to Open PPF account and invest in gold in her name.I also liked the idea of having a trust in her name.

  59. HI Hemant ,

    Really a nice article to make aware a layman who is always concerned with earning source . With at least he has a brief idea what beautiful could be the future if he consider the planning of investment.

    Hemant as i seen some old person who are working after their retirement just because of fulfilling the family expectations which they are unable to meet due to lack of planning. Your efforts are highly appreciable that you are guiding us through this portal for our better future .

    As a good saying:- what ever the knowledge & efforts is required to earn money. 10 times of that knowledge & efforts is required to spend it. And you prove it here .

    Our mind should be focus on all our spending in terms of anything. This I learn from you. And also forward this gyan bhandar to my colleague .

    Thanks A lot.

    • Hi Munish,
      I agree with but if people change their definition to Income – Savings = Expenses – things may become bit easy.

  60. Hi Hemant,

    i really love/like you advise…ppl do BIG mistake taking insurance in child name…I belive the person who earns should have adequate insurance.

    I have 6months kid, i started his future plan as below
    1. 3 MF’s in SIP 1000 for 10yrs
    2. PPF monthly 2000/-
    3. Taken Term insurance for 20lacs with Aegon Religare recently

    Planning for Money back policy and Retirement plans in next 6months, my age is 33.
    please advise anything more to do.

    Thanks Hemant.

    • Hi Vijay,
      Even buying insurance for investment purpose will be mistake. Think 10 times before buying “Money back policy and Retirement plans” – you still have time on your side.

  61. Hi Hemant ,

    Very Nice Article ,
    Its really helpful & many people will prefer this to be perfect more than their retirement planning
    It would be great if you could write some sort of sequel of this article where you can highlight how to teach financial awareness & value of money to the childrens at different ages through games and various other techniques but without making it boring classroom experience for them ,
    We can categorise it may be with child : under 4 years , 4-8 years , 8-14 years , 14-19 years ?

    Because along with financial planning for them , i feel they should also be aware of what are we planning for them so that they will respect the money and it will also help them to be financially litarate far earlier in life than us ….. 🙂

    Thanks
    Rohan

    • Hi Rohan,
      Good idea but right now I am in mood to guide the parents – so they can give good money SANSKARS to their kids.
      Just read this quote – someone pasted on TFL facebook wall “Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from GROWN-UPS who behave in the market like CHILDREN.” – Warren Buffet
      No price for guessing – what I am trying to hint.

  62. Hi Hemant,

    Past two months i have started reading your financial articles. It is really amazing. You are articles are very very clear. The best thing about your articles are you will touch people’s emotions and mind set both, And help us to create wealth. Thanks a lot for posting child plan. I am not married but” I love my dream daughter”.

    Thanks,
    Anand

  63. Hemant Bhai,

    Like all your other articles this one is also a good and helpful article indeed.You are right,normal parents will be happy with buying insurance policies or some bonds in name of the children without knowing that’s not sufficient for their future.Your points of planing before child’s born is also agreeable.Regarding the Health Insurance policies, i think maternity is only covered after four years after starting of the policy (Apollo Munich medi-claim etc).

    Opening a PPF account and starting SIP on mutual fund(Equity-long term) for our child will be a good idea.

    @anil kumar bhai – your last words of the your comment will be a great encouragement for Hemant bhai and I am happy that people like him are here to guide us on the proper way.anyways it’s wonderful article again from Hemant bhai and for sure i will share it with my friends and colleagues.

    Thanks and regards,
    Shamshad.M.M

    • Hi Shamshad,
      Yes you are right maternity is only covered after 4-6 years – in most of the policies this option is not available. But still one can look for this type of policy – apollo is a good option.

      • Hi Hemant,

        Thanks for sharing your views with us.

        Max Bupa HeartBeat plan (silver/gold etc..) do provide matenity benefit after 2 yrs and they also give vaccination free for 1 year for child born after 2 years (from the date of enrollment of your policy).

        Thanks,
        Amit

  64. Thank you Hemant ji,
    I have a 12 years old son, i have put some money that he got as a gift in Unit trust,
    but after that i have done nothing thinking whatever I have is for him only,
    now after reading you article I want to give him a head start for his future
    do you think I can start a PPF for him now, can I invest in HDFC Child plan?
    Your Advice is very helpful, please do write to me.

    As always thanks for a wonderful and a very helpful article on children because I feel no matter how much we do for our children it will not be enough when they grow up giving the present system of inflation.
    Regards
    Tony

    • Hi Tony,
      PPF now will not be the best option as he has already turned 12 – minimum lockin in PPF is 15. Avoid any scheme which says child plan or pension plan…
      As you have mentioned he is having some money in Unit Trust (uti amc) – just check is it still in bonds or was converted in some fund. For fresh money you can think for SIP in balanced or diversified equity funds.

  65. Hi Hemant
    You are absolutely right, for most middle class parents Child Future Plan is even a shade above retirement planning.I have read many articles on Child Future Plans in many personal finance magazines, but I have no hesitation in saying that yours is the most comprehensive one.Some of the points which you have mentioned have probably never been mentioned in this context.My only regret is that people like you were not around when I was planning for the future of my kids.

    • Dear Anil,
      Thanks a lot for your appreciation. I think this the best comment that I have received till date “My only regret is that people like you were not around when I was planning for the future of my kids.”
      I don’t know am I really worth to get such an admiration. Just sharing what I have learned over a period of time – hope it will bring some change in financial life of TFL readers.

      • Dear Hemant,

        Indeed this article was a treat as I am looking forward to do investments for my 6 months young son.

        Yes I agree with Mr. Anil and I am glad that I came accross TFL Guide at the right time /age. With your expert guidance I can start learning about managing personal finance and Hemant ji I thank you once again for this interesting and Very Useful article…

        Although you have mentioned in your other article about the term insurance and its importance, still I feel that instead of having a term plan, a plan like Smartkid (ICICI Pru) could be a good choice. In this plan the premiums are waived off by the company after death of parent and the company pays all the remianing premiums, sum assured is paid after the death of parent And the policy continues as normal, with all the benefits to child. However, in term plan, child or the nominee will recieve one time payment of sum assured and thats it.

        Please advise in this regard.

        Thanks, Nishi

        • I think you should do some calculations to get an answer. It is you who should convince yourself which is the best option for you and your family.
          Compare the premium paid in case of Smartkid and any term insurance.
          Compare the returns in case of Smartkid and any term insurance.

          Suppose you are paying 25k as premium in Smartkid. Now break this amount into two parts, one for term insurance of 50 lakhs and rest for MFs. A term insurance of 50 lakhs should not cost you more than 7-8k per annum. If you invest rest of the money in couple of good MFs, even with low expected rate of returns of 12%, it should give you more than Smartkid or any such policy.

          Do the calculations and find it out yourself.

    • anil kumar sir,

      what u told will be false, because I have seen when some people come in the name of agent we will treat them as sub-standard, and we behave like we r superior to them. so we neglect them and their advice, think twice will u pay fee to get the advice ???? rather we beg for 1 or 2 month premium to pay…. I have seen many people like this including me so don’t say that u don’t have anyone to give this advice…..

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