What is your most important goal in life? What is that one thing which drives you to put in your best? For me, it’s my 6-year-old daughter. Her well-being, overall development, education, extra-curricular activities, etc. is of utmost importance! Thus, my sole motivation to work is to provide a better future for her and I can actually do anything to achieve that!
There is no shortcut to success and I do not promise any such thing. However, one step taken towards the right direction is one step closer to your destination.
Making a new financial plan is one such step in this Financial New Year. Let’s face it – we all hope for a large bank balance and a small waistline at the beginning of each year but end up with the opposite at the end of the year! So this year, to ensure that doesn’t happen, you must come up with a solid financial plan. And I am here to help you. Take a look at the guidelines mentioned below as we tell you exactly what you can do to improve your financial health in 2017-18 and beyond.
Thus, in this Financial Year, I will take you through a Quick Recipe for Mental Peace, i.e. in order to provide the best for your child without compromising on her well-being!
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Ingredients
- Expense Analysis: Understanding the probable expenses that your child may need for her future education
- Current Investments and Debt: Take a stock of your current investments and debt that you have already incurred for the same goal
- Asset Allocation of current portfolio is very important so as to analyse your debt-equity ratio and then opt for the suitable solution
- Product Selection for the Key Solution to your Child’s Education Goal
Tax Assessment
Time Taken:
- Preparation Time: 2 hours monthly, to check the overall performance
- Cooking Time: Lifelong
Procedure
- Expense Analysis: Firstly you need to chalk down your goal in terms of:
–How much money may you need for your child’s education?
–When do you need the same?
— How much can you save per month from now towards that goal?
— How much have you already accumulated for your child’s education purposes?
After that is done, you will be able to make the correct provisions for the large expenses and manage the rest of your money effectively.
- Current Investments and Debt
Taking a stock of your current investments, analysing them along with your debts is the key to a successful Financial Plan. Your Financial Plan for your Child Education Goal revolves around the answers from the previous analysis:
- How much money may you need for your child’s education? This is the final corpus that you need to build.
- When do you need the same? The tenure of investment.
- How much can you save per month from now towards that goal? The monthly payout that you can afford.
- How much have you already accumulated for your child’s education purposes? The final corpus – the fund already accumulated is what you actually need at the time of your child’s higher education need.
Planning ahead always helps. So if you have thought about investing and have not taken the plunge yet, I can help you out with the products that you can choose from.
- Asset Allocation of Current Portfolio
Next, you have to check your current financial portfolio which includes all your investments types and assets. You need to choose a product which suits your needs according to your risk appetite and financial goal.
- Product Selection:
This is perhaps the most important step since it determines your child’s future and there can be no compromise on the same. You need to weigh your pros and cons but I will tell you what product I have selected for my 6-year-old and why!
I have selected a Child ULIP with many benefits rolled into one. In fact, ULIP is a superb plan as it can be your one-stop-solution for quite a number of goals! It is a unique ULIP Plan with multiple advantages! In fact, it is one of the best ULIP plans in India that I have ever come across!
What is a ULIP Plan?
ULIP Plan is a Life Insurance Policy with an opportunity to get high returns by investing in the equity and debt market. In fact, it is the best of both worlds!
Why should I invest in a ULIP?
You must invest in a ULIP as it provides the security of insurance as well as higher returns of the equity market without much of the market volatility due to monthly rupee cost averaging!
I have selected this plan because:
- There is the benefit of the Power of three – Systematic Monthly Investment plan, Systematic transfer, and systematic withdrawal option.
- Systematic Monthly Investment Plan helps me to do Wealth Accumulation:
o Pay monthly premium.
o It provides certain regularity in investments.
o Gives me a rupee cost averaging of the investments and market volatility
o Provides monthly tax-free investment under section 80C
Systematic Transfer Plan helps me to do Wealth Preservation:
o Opt for a systematic tax-free transfer from one asset class to another without any capital gain taxation disadvantages
o Provide a holistic plan with the additional amount being systematically transferred from equity to debt one balancing method
- Systematic Withdrawal Option helps me to do Wealth Utilisation:
o Provide for tax-free corpus for my child’s education
o Provide an amount for her higher education tuition fees
o Can be used as a second source of income as well
- Tax Assessment
This is a 3-fold tax-free product wherein you can save tax while investing under section 80C, save tax while doing a systematic transfer from one asset class to another without any capital gain taxation accounting while doing a wealth accumulation and finally avail a tax-free systematic withdrawal for your child’s education.
Serving suggestions
Now that you have the recipe for the perfect financial plan for your child’s education, go ahead and give it a shot. The time is right for you to take control of your finances so that you do not have to fret later in life!
So opt for a good child education plan like I have and help yourself to grow your money effectively in this financial year and beyond.
Featured Image Credits: Image by jcomp on Freepik
