Investing for Child Education
@goodfundadvisor (671)
India
July 17, 2009 11:52am CST
One Mr.Vishal wrote to me :
Srikanth Sir,
I was browsing the net for information on children's policy and accidently found your site. I was really impressed by your blog's content and would like to have your opinion.
I am 36 years old. My child is 4 year old. I would like to invest in any Child ULIP plan for him so as to to have about 20 lakhs in about 15 years from now.
Please give me your valuable suggestion.
SRIKANTH SHANKAR MATRUBAI replied :
Mr.Vishal,
first of all, you need to reconsider your investment approach. Insurance and Investment are separate avenues. ULIPs are a disguised costly form of Mutual Fund with High Charges especially in the inital years which eat into your capital and leave you with very little principal amount.
Instead consider investing in Term Insurance first and cover adequately your life. Term Insurance are the cheapest form of Insurance.
Then, consider investing in Mutual Funds. Mutual Funds are very cheap and very transparant. Now with entry load banned, they are much more attractive. Do invest in some better known funds like
Birla Sunlife equity fund
DWS Alpha Equity fund
DSPBR Top 100 Fund
Fidelity Equity Fund
HDFC Top 200 fund
Mirae Asset India Opportunities fund
Reliance Regular Saving fund Equity
SBI Magnum contra Fund
Sundaram select Focus Fund
These fund have had a great track record and could be considered for really Long Term Investment.
If you are really so much attached to Insurance part, there are mutual funds which also offer Free Life Insurance Cover.
Do visit my blog for more details on these.
Wish you all the best.
Srikanth
1 person likes this
2 responses
I believe the children whom they study hardly.They will be success.I don't believe the money can always build the good education.However if the parents will support about money.It is good for children.@goodfundadvisor (671)
• India
9 Aug 09
this discussion is not about whether children will study hard or not. Whether children study well or not, as a parent, it is your duty to put some money as saving to fund the child's future education and this discussion is an extension of an effort to try and find out a better way to put your hard money into.
@Wismay (2037)
• India
17 Jul 09
Excuse me, you think he can achieve his goal of 20 lakhs in 15 years by following these plans? Insurance and Mutual Funds? I don't think so. Unless he saves a lot he can't achieve it by using these plans.
Well, he can be secure and get protection from Insurance but his goal is different. Yup, it is quite simple that if you save 1 lakh plus every year through some Insurance plan and Mutual Funds you easily get 20 lakhs in 20 years.
That is not investing, that is saving. Investing should produce greater returns.
And Insurance can never be considered as investing though recently some plans tries to do that. The basic responsibility of Insurance plan is to give protection.
Mutual Funds are average for most of the time. I haven't seen anyone getting much from them except those who manage Mutual Funds and those who advise others to invest in it.
I just hope your blog helps those who wants to know about Insurance and Mutual Funds. I thank you for helping others to find suitable plans for their future security.
Wish you the best!
Happy mylotting!
Regards
@goodfundadvisor (671)
• India
18 Jul 09
Dear Wismay,
Most Mutual Funds are average in their performance. ULIPs are worse., they are below Average!!!!
That is precisely the reason, the person has to invest in Mutual Funds and invest in a Good Mutual Fund at that.
Index Funds are good alternative, but Indian Index are not true mirror of the Indian Companies because of faulty additions in the Index. Just look at the weightage of Reliance Industries carries, more than 13%.
That is why, it is essential, especially in Indian context, not to look at Index Funds, but at Diversified Equity Funds, especially Funds which have consistently generated better returns than their Benchmark over all periods of time.
Index Funds, of course, should form a part of Portfolio, but should better restricted to about 5-10% depending on the Risk Profile of the Investor.
Thanks for your kind words, Wismay.
Best of luck,
Srikanth
