Child Plans – No Child’s play!!

I was looking for a Child Plan for my kid, I researched a bit, met a few agents, found all of them really fcukall, nothing was clear or was any decent returns promised,  also probably coz  they are bound by IRDA not to promise any returns,  all projection were some excel games.

Also one does not know if any of these insurance companies will be around, remember AIG, Fortis etc.

IMHO the best option is to invest in a small flat.

Buying a small flat has the following benefits :-

  1. Asset Appreciation (Average 10-15% annually)
  2. Tax Saving on Principal repayment.
  3. Rental Income can offset your EMI payments a bit
  4. Reverse SIP (Take Loan & Invest)  is better than SIP (Regular payments).
  5. Inflation Game – Assume interest Rate is 10% and Rate of Inflation is 10%, So you are virtually paying 0% Interest rate compared to the money put in a bank.
  6. Weekend outings and make more friends.
  7. Historically property has always given decent returns in India.

If you want to take insurance, buy a simple term insurance and yes, do keep investing in equities but not with the funds which you’ve earmarked for your kids.

4 Replies to “Child Plans – No Child’s play!!”

  1. nice analysis! i don’t have a kid (far from even being married :P), but i’m convinced that a flat is the best investment to make at my stage in life too – for the same reasons you mentioned!

    one important thing is to make sure you’re insured for the value of your loan, so that in case anything unfortunate happens your family doesn’t have to bear the burden of your loan 🙂

  2. First of all congratulations on the nice blogs, I keep on coming back here for the nice posts you have written.

    Now coming to my question, in the post above you mentioned not to invest the funds ear marked for your kid in equities, why so? Given that the best returns are given by Equity in a long run (assuming kid’s money will be useful during the time of his/her education i.e. 15 years down the line).

    Am I right in thinking like that or you still go with the insurance/small Flat plan of yours?

    1. @Kristopher Yes, the home insurance is nice idea, its around 20k for 5 years, but if you are buying a house for say 10 lakhs for 20 years it would be around 80k or more for 20 years, but yes quite important to hedge the risk.

      @ Dipak Equities are no doubt the best investments, but its not the safest specially if one considers the funds are earmarked for your kid, I would still go with a small flat as an investment for the kid.

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