Children Gift Fund- it is the primary need of child education to save and invest money. The cost of education is touching the sky all over the world. If parents are not planned of their children's higher education, then in the end, they will have to get a loan.
Let's talk about the fee structure of a child's education. The cost of education in well-reputed schools is about Rs15000 per month and increases yearly. The cost of an engineering course is approximately 8 Lakh, and that would increase with time.
Likewise, the fee for an MBA is Rs 15 Lakhs nowadays, which will reach Rs 30 Lakhs by 2030 or might reach Rs 40 Lakhs.
These numbers are given here not to scare you but to wake you to planning children's education.
What are Children's, Gift Fund?
Children Fund or children gift type fund is specifically designed as a mutual Fund with this objective. The children's fund invests in debt and equity types of debt.
Mostly for 5 years, the children's fund was locked but extended until the children became adults. Tax apply on this Fund's maturity, but according to the 80C tax deduction act, parents can claim 1.5 lakh due to the Children's Fund investment.
Comparison of children's fund with other investment options:
Through different schemes like FD and PPF, the children's fund is compared with other investment plans.
Advantages of Children Fund:
Based on the objective and risk appetite of investment, parents can select options of Children-Fund for long-term investment.
Children- Fund investment can remove the financial burden of children's education and other goals from parents' shoulders.
Life insurance option adds up in some children's funds.
Investing in this fund, parents can get tax deduction benefits.
Tax deduction from maturity can lower the burden of the tax.
Anyone can invest in this Fund through the Lumpsum and SIP route.
Drawbacks
The lock-in period of 5 years and above is included in this Fund.
The return will be linked with the market and lower than the mutual funds equity-oriented.
SEBI categorized the children's fund and offered nothing special.
Children Gift Fund – is it the best investment option in child Education?
Suppose you are worried about the increasing cost of education in higher education. In that case, Children-Fund is the best option from an investment point of view despite of benefits and drawbacks. However, there are better options for other investments.
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