If you want to make the life of your child safe, secure, and rewarding, start investing INR 500 every month for the child as early as possible, say financial experts.
Even a small amount of INR 500 will go a long way in creating a solid financial corpus if it is backed by good planning and a strong investment vehicle.
The right kind of investment is of utmost importance because it will safeguard the future interest of the child and lessen his financial burden.
Best investment plan to invest INR 500 every month for the child
Planning an investment of INR 500 every month for a child is a huge thing; hence investors need to consider many factors before finalizing the perfect investment vehicle.
1. Systematic Investment Plan or SIP
Invest INR 500 every month for the child in mutual funds with the help of SIP, as the small amount will keep on adding and compounding to create a very large financial corpus.
SIPs are one of the best vehicles because it encourages investing and saving consistently in a disciplined manner.
Start as early as possible because it will provide a large window for the fund to accumulate. For example, if the investment period is 20 years and the expected rate of return is 10% per annum, then a monthly sum of INR 500 can result in nearly INR 3,82,848.
Invest through the Edufund App, as it offers a choice from 4000+ direct mutual funds. It is easy to start and stop a SIP anytime you desire.
2. Direct Equity
For investors who are not afraid to take high risks, the amount of INR 500 can be used to buy direct equity.
Choose growth stocks as they will yield better returns (in the average range of 50%) than average equity, which is expected to yield a return between 13% – 15%.
Remember, patience is the key to growth equity, and you have to remain invested for the long term to get solid returns.
3. Public Provident Fund (PPF)
The PPF investments are for investors that do not want to take risks and are looking for safe investment vehicles. With a 7.1% interest rate, PPF is a long-term tax-saving investment scheme that can be opened in a bank or a post office.
4. Recurring Deposit Account
The interest rate on recurring deposits is nearly 6.5% to 6.9% depending on the bank. The RD account can be opened in a bank or a post office where an investment of INR 500 will keep on accumulating and earning interest throughout the investment period.
The RD account is for investors who want to keep their money in a safe environment and simultaneously earn some money.
5. Child Insurance Plans
Child Insurance Plans are some of the best vehicles to invest INR 500 every month for a child. There are child life insurance plans that can be paid on a monthly basis.
With an amount of INR 500, you can buy a term insurance plan that offers high death benefits.
Child investment plans are very advantageous because if in some cases the policyholder dies then the future premiums are waived.
The insurance company then keeps on investing the premium amount on behalf of the policyholder, and the amount is given to the child as per the terms and conditions of the policy.
Examples of child insurance policies with a premium under INR 500 per month are SBI Life’s Term Insurance Plan, where the minimum premium is only INR 365 per month, and the ABSLI DigiShield Plan, with a minimum premium of INR 477 per month.
If you have a girl child, then there are also several investment schemes just for the girl child. The government-backed scheme Sukanya Samriddhi Yojana was introduced specially to save the future of a girl child.
You can invest INR 500 per month and the amount is payable after the maturity period of 21 years.
6. Stocks & ETFs
Although stocks are considered risky, they have an advantage over some of the investment options, like recurring deposit accounts, because of high returns over a long period.
ETFs are also high return cost-effective investment vehicles through which the investor can invest in entire sectors.
Conclusion
Take a leap of faith and start the journey to invest INR 500 every month for the child because it will go a long way in creating a lump sum amount in later years.
Take the help of the investment experts on the Edufund app to create the best possible personalized financial plan for your child with an amount of INR 500.
The strategies are backed by data, research, and appropriate tools like the investment calculator so that you will get better returns on your investment, and that too in a secure and transparent environment.
