Things you should know when doing Investment Planning for Minors

Every parent tries to provide their children with a financially secure life. But with the changing lifestyle and rising inflation, it becomes quite challenging for parents to plan for the future financial security of their child.

With everything becoming more expensive day-by-day, it becomes difficult for the coming generations to meet their lifestyle’s varied demands. Therefore, parents try to create a financial backup for their children by opting for different investment plans for minors available on the market.

To know more about saving and investment plans for children, continue reading.

In India, parents are always concerned about the money required for their child’s education and marriage. Thus, they believe in making timely investments for their children without jeopardising their own financial stability. This helps them make a sizable surplus to protect their children’s future in numerous ways or from financial disasters.

As a parent, when you invest in saving plans for minors, you help your child in other important phases of their life. It helps them receive the quality of education of their choices without making any compromises. Also, it provides them with a solid foundation to start something of their own. Apart from this, it acts like a robust financial cushion for your children and helps them lead their lives in the best way possible.

If you are searching for the right time to start investment plans for minors, then it will be as soon as you can start. The earlier you start saving, the more beneficial it would be for your children, as with time, the invested money will eventually grow.

The returns one gets after investing in plans might increase in the long run. This is the power of compounding. So, by the time they grow older, you can accumulate enough money to provide for their expenses. Also, it will be a wise decision to start saving early for your child’s better financial future.

Most Indian parents blindly walk through the investment terrain and thus end up randomly investing their money in disparate investment plans for minors due to ignorance.

But it will be really helpful if you follow these steps as a part of your preparation strategy while getting started with investment plans.

Step 1: Set an Investing Goal

Before diving into any investment plan, it is important to determine what your ultimate goal is like, whether it's for funding your child's education or for their marriage. This goal will help the parents ascertain which type of investment plan or the saving scheme they should opt for.

Step 2: Select the Right Investment Avenue

 Depending on your financial goals, you can choose the best investment plans for minors to fulfil your child’s long-term needs.

PPF is one of the most reliable, time-tested investment accounts that can be opened for minors. As it involves a long tenure of about 15 years, its compounding effect is great.

Apart from this, there are other profitable investment avenues like Sukanya Samriddhi Account, investment in gold, equity mutual funds, debt mutual funds, etc.

Step 3: Open Your Account

Once your investment goal and avenue are decided, now you can open your account in the respective investment avenues. Also, you can choose the type of investment portfolio as per your requirements.

Step 4: Decide How Much You Can Make a Contribution

It is important to figure out your monthly or yearly contribution to this investment plan or scheme. This will help you keep track of your budget, and you will never fail with making contributions to the account on time.

Step 5: Involve Your Child in this procedure

Ensure to involve your child early in this investment process. This will keep them excited about the money from the very beginning. Also, they will be familiar with every step of what is happening in this investment process. They will understand and gain an interest in further investment and saving processes.

Step 6: Encourage Contributions from Your Child

Whether your child is getting some allowances or doing a part-time job, always encourage them to contribute some amount to this investment plan for their future.

These are the overall steps that a parent needs to follow while proceeding toward investment plans for their child.

When you decide to make investment plans for minors, you need to keep in check some documents that you might require at the time of purchasing plans.

If the plan is purchased with the child as the insured person, then the following documents are required:

• An age-proof document of the child
• 2-3 passport-size photographs of the child as well as their legal guardian or parent
• A duly filled-in application form with the personal information of the child and their legal guardian or parent
• The legal guardian/parent’s KYC documents, like an Aadhaar card, PAN card, passport, and other documents as such.

However, if the plan is purchased with the child as a nominee, then the following documents are required:

• An age-proof document of the parent or legal guardian of the child
• 2-3 passport-size photographs of the legal guardian or parent of the child
• A duly filled-in application form with the personal information of the child and their legal guardian or parent
• The legal guardian/parent’s KYC documents, like an Aadhaar card, PAN card, passport, and other documents as such.

Note: All these KYC documents should be officially valid, as the investment plan provider will verify the identity and address of the legal guardian or parent on the basis of these documents.

So, as the economy is hitting the Indian market at an all-time high, it is the best time to opt for investment plans for minors to ensure your child's lifelong financial success. This will also help your children get excited about finances, and they will turn out to make smart moves in the future regarding finance.