investment planning for a child

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Posted by appa | Posted in finance | Posted on 20-03-2009

Following Maxim’s example, I felt that Abhinav should have a bank account of his own as well. Visited the nearby Canara bank and found that its quite easy to do so. And also found that there was a good policy (that would help me save some tax as well!). A parent could buy this insurance for a child, and pay x amount of rupees every year, and in the case of a death of the policy payer, then the bank guarantees that it will continue paying the same amount every year till the end of the tenure. The tenure is 10 years, after which the amount is locked and the profit invested within itself for another 10 years, so at the end of 20 years, the total amount which is quite a handsome sum is handed over to the child.

Of course I must’ve botched up the description… so better details from the site are here: Canara HSBC Oriental Bank of Commerce Life Unit Linked Limited Pay Endowment Plan. A bank account isn’t necessary for this, but we still want to open the account so that we can save money regularly and also save a bit of the premium there as and when we have the budget for it, so that the total amount is ready before its next due date next year.

Comments (2)

Dear Sanjay

Since i could only read mukthabalaga today ( obviously recession times are making me work hard!).

Your choice is good however note the following pls
a) What is the target amount you would want to get the child. Example 5 lakhs at 18 years of age for higher studies… Have you done any such planning. It costs different rates for differnt courses, MBA localy, aboroad etc.

b) Inflation adjusted value. This simple means today a child takes 9.5 lakhs investment to complete MBA in indian univercity. What would the same cost 18 years down the line – thats the sum you should take this policy/account for otherwise you would fall short

c) Please read the fine print. The exclusions are generally more.

Best of luck for abhinav!

cheers
mohan!

thanks a lot Mohan both for advice as well as good wishes 🙂 (a) I can think about but I think (b) is a bit too much of speculation for me so I’ll just leave it to chance. Will go through fine print again in detail.

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