Investment advice needed for girl child.

xkcd0137 said:
https://www.reddit.com/r/IndiaInvestments/comments/60f8hf

Read the above post for a better idea.

1) SSY

2) invest SIP in an Equity Index fund like UTI Nifty Index meant only for her

3) get a health insurance addon for kid

4) maybe even start a term insurance, her as a nominee

5) don't go for ulips or any other product by insurance companies.
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^ This. Do not mix investments and insurance. Do not buy any combo products like ULIPS etc. Keep insurance and investments separate.

I would like to add PPF to the above suggestions. Best time to start now. Lock in period of 15 years doesn’t matter much. Will get a EEE(tax exempt on principle, interest and at withdrawal)

Highly suggest taking a look at r/indiainvestments wiki.
 
Please correct me if I am wrong below..

There are "Children Fund" mutual funds by many AMCs. They usually have a lock-in of 5 years or in some cases upto the child turn 18. I am myself investing in one of these but It is because my dad started (using my money) for my son and I am continuing. But I feel this is only for people who have urge to sell their funds or take money out and this fund doesn't allow this so sort of your money stays invested. The reason I am keeping invested and still due to decent returns and fund is like hybrid kind of with 65% in equity and 35% in debt instruments.

OP does not need these kinds of funds if he wants liquidity and also he his disciplined enough to not take out money from invested amount unless absolutely needed.
 
raksrules said:
Please correct me if I am wrong below..

There are "Children Fund" mutual funds by many AMCs. They usually have a lock-in of 5 years or in some cases upto the child turn 18. I am myself investing in one of these but It is because my dad started (using my money) for my son and I am continuing. But I feel this is only for people who have urge to sell their funds or take money out and this fund doesn't allow this so sort of your money stays invested. The reason I am keeping invested and still due to decent returns and fund is like hybrid kind of with 65% in equity and 35% in debt instruments.

OP does not need these kinds of funds if he wants liquidity and also he his disciplined enough to not take out money from invested amount unless absolutely needed.
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actually these child funds/schemes are useless. back in the day before braodband internet in the 90's my parents had got such a scheme for me of a nationalized bank when i turned 18 i got some x amount similar to the current schemes whereas instead if they had purchased the shares of reliance when they got such mf/inverstment child scheme i would have received 5x that on turning 18 with the same amount of investment.
 
fastapifastdisks said:
actually these child funds/schemes are useless. back in the day before braodband internet in the 90's my parents had got such a scheme for me of a nationalized bank when i turned 18 i got some x amount similar to the current schemes whereas instead if they had purchased the shares of reliance when they got such mf/inverstment child scheme i would have received 5x that on turning 18 with the same amount of investment.
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They could have also lost money. No one knew reliance would gain so much so could have invested in loser stocks too.
 
fastapifastdisks said:
actually these child funds/schemes are useless. back in the day before braodband internet in the 90's my parents had got such a scheme for me of a nationalized bank when i turned 18 i got some x amount similar to the current schemes whereas instead if they had purchased the shares of reliance when they got such mf/inverstment child scheme i would have received 5x that on turning 18 with the same amount of investment.
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This is actually a normal mutual fund, just that it has lock in. This is the one I am investing in.
 
raksrules said:
Please remember, it has lock in period. But yes when you see 5 years / All time returns it is still >16% which I think is pretty good. Also it goes without saying..."Past performance is not an indicator for future performance".
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Technically that nephew/neice is my brother/sister(long story) just need a backup fund for his/her education incase parents pass away when he/she turns 18,given the age of his/her parents now there is a 70% chance that will happen then i will be the sole guardian so.
 
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Please don't invest in Child plans or retirement plans of any kind. Invest in Index funds that will give you much better returns without the lock-in and more importantly without the overly high "expense ratio"
1637306140042.png

1637306188695.png

Note that the Expense Ratio's are calculated on a daily basis and adjusted on the NAV, so if a NAV of a fund is Rs. 200 and ER is 1% you spend Rs. 2 on a daily rate vs. if the ER is 0.5% it would be only Rs. 0.0015 paise per day.
 
I agree on the expense ratio part. I totally forgot to mention. Index funds usually have far less expense ratio due to them not being actively managed. Paying higher expense ratio is worth only if the fund is beating the index and is consistently generating great returns. But then you cannot predict if a fund will or will not beat index so it is a gamble.

For OP, I too would recommend to just start SIP in something like N50 Index fund and let it run on autopilot. Then once say your salary increases, you may increase contribution (some AMCs have ability to automatically boost your contribution every X months) or say a bonus comes in then put some X amount as lumpsum in same fund.

Also don't get swayed by checking returns of only last 1-1.5 year. Things have been extraordinary in this time period and we may or may not sustain the same growth.
 
aasimenator said:
Please don't invest in Child plans or retirement plans of any kind. Invest in Index funds that will give you much better returns without the lock-in and more importantly without the overly high "expense ratio"
View attachment 120417
View attachment 120418
Note that the Expense Ratio's are calculated on a daily basis and adjusted on the NAV, so if a NAV of a fund is Rs. 200 and ER is 1% you spend Rs. 2 on a daily rate vs. if the ER is 0.5% it would be only Rs. 0.0015 paise per day.
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from where do you got this chart/information? website?
 
raksrules said:
Also don't get swayed by checking returns of only last 1-1.5 year. Things have been extraordinary in this time period and we may or may not sustain the same growth.
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I totally agree with this, when checking returns of any Mutual Fund please don't factor in the last 1 - 1.5 years basically your returns should be calculated before the dip in March 2020 and exclude the returns till the current date.
P.S. My screenshots were taken with that consideration time frame from Jan 2014 - Jan 2020, because you cannot make long term bets based on the last years performance of any stocks or mutual funds for that matter.
 
scott1391990 said:
So this is my first time in my life when I have decided to invest for my child's future.

She was born in June this year and since then I am having a hard time choosing what's right for her.
Policybazaar executives seem like they just want to sell anything to the customer. Although they do clear all your doubts and help you all along, but they just won't let you go if you give them your number.
The guy at policybazaar gave me a plan from Max Life Insurance where he said that if I pay 10,000 monthly for 10 years, my child would get around 80-90 lacs (don't remember the exact amount) after 20 years. This policy would include, Life Cover, Premium waiver in case of mishap, and monthly salary to my wife in case of mishap. This seemed all good and I really wanna buy this plan. But it sounds too good to be true.

The Sukanya Samridhdhi Yojna doesn't give waiver off or the monthly salary in case of mishap and thus the policybazaar guy didn't advice on getting it.

Anybody who has more knowledge about these things, please help me as it's my first time.
Should I go with the Max Life Insurance?
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First, Congratulations !!!
Second, Good thing that you wanted to invest in your child's future. Hope you have something for you too , if not, that's more important to secure your whole family, not just the kid. As you hear in flight during takeoff, help yourself before helping your kid or person beside.

As other FMs mentioned, never mix investment and insurance. You have a looong thread here in TE itself, go thru from last page, will give you good idea -

Also, my reply there -
frozenscotch said:
I saw in some queries about LIC, for them

1. DO NOT MIX INSURANCE WITH INVESTMENT
2. DO NOT TAKE LIC INSURANCE POLICY FOR INS/INV PURPOSE, I SAY DO NOT TAKE LIC AT ALL !!!

For above requirement, purchase a term insurance policy AND a high rated "large" or "large and mid cap" mutual fund.

Equities are a long game, more than 3 years. Do not invest for lesser periods. Last year was an exception and you don't want a similar situation again

My 2 cents :cool:
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In short,
Insurance ->
- get term policy for you and your wife separately with raiders covering illnesses, accidents etc
- medical policy to cover hospital expenses
Investment -?
- mutual funds (SIP mode)
- stocks if you have know-how
- gold may be
-- (physical coins, you get those 24K ones in tanishq or reputed gold stores, but they might not be safe to store)
-- govt gold bond (https://m.rbi.org.in/scripts/FAQView.aspx?Id=109), they are safe in terms like they cannot be looted.

SS or any other govt scheme might not beat mutual funds in long run, lets say 20 years, but they are not volatile.

Now, its your call :cool:
 
frozenscotch said:
SS or any other govt scheme might not beat mutual funds in long run, lets say 20 years, but they are not volatile.
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These schemes for people like us is to have that safety net and one way of diversification in instruments we consider risk free and safe. So one should not discount them. And usually they come with lock in so one needs to be prepared about the fact that the money is not usable for several years.
 
Do whatever you do but don't do that 10k per month get crores after 10 years thing. It is a big long term scam/net to lure customers in and keep them trapped for life. Avoid agents they are just good salesmen selling what they want to sell nothing more.
If you are thinking very long term invest in Index fund. Your APR will be same as our economy averaging 15-16% since decades. Do your research and don't pay any brokers/middlemen.
 
The amount of financial illiteracy in this thread is astonishing. At this time, if you are putting your money anywhere except equity, you are just throwing away your money. Yes it does take some research and some knowledge of the stock market but there are lots of resources on the web including some very good YouTube videos. And nothing will ever beat equities in the long term. You know what these shitty insurance companies do? They take your money for returns of 4-5% and put them in stock market and make a hefty profit or 20-30%.

And when it comes to Gold, the only good way of investing in Gold is by sovereign gold bonds issues by RBI. Buying physical gold is the worst, and digital gold is still bad.

I wouldn't consider crypto for anyone except very aggressive investor. Its extremely volatile.

All in all if you are making a 15-20% profit per annum, you should be happy.
 
raksrules said:
These schemes for people like us is to have that safety net and one way of diversification in instruments we consider risk free and safe. So one should not discount them. And usually they come with lock in so one needs to be prepared about the fact that the money is not usable for several years.
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Right, they are risk free as they are backed by GOI. And they have lock-in to discourage withdrawal for every other need.
Basically, its same as PF (taxation of EEE during withdrawal).
Now, SS is 7.1 %
EPF/VPF is 8.5% for current year, its always above 8% in past 10years
(https://www.etmoney.com/income-tax-saving/epf-interest-rate)

comparison - https://groww.in/p/savings-schemes/ppf-vs-sukanya-samriddhi/
I would suggest PPF if OP do not have EPF.

Lock-in is one thing I am not comfortable with.
If OP has the option, I would suggest to increase his contribution to VPF. One lock-in instrument in life should be enough.

EDIT - NEVER go for ULIP schemes. They are very very bad for investors
 
pauldmps said:
The amount of financial illiteracy in this thread is astonishing. At this time, if you are putting your money anywhere except equity, you are just throwing away your money. Yes it does take some research and some knowledge of the stock market but there are lots of resources on the web including some very good YouTube videos. And nothing will ever beat equities in the long term. You know what these shitty insurance companies do? They take your money for returns of 4-5% and put them in stock market and make a hefty profit or 20-30%.

And when it comes to Gold, the only good way of investing in Gold is by sovereign gold bonds issues by RBI. Buying physical gold is the worst, and digital gold is still bad.

I wouldn't consider crypto for anyone except very aggressive investor. Its extremely volatile.

All in all if you are making a 15-20% profit per annum, you should be happy.
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Telling anyone to put everything in equity is also not correct. Consider my case. I invest about 90K a month. Out of this, 70K is in mutual funds and approx 20K is what I put in market directly in bluechip companies.

So the above 90K amount is total equity for me. But then every year I also invest 1.5L in myself a wife's PPF account so that covers my non equity investment.

And I already have few bonds or NCDs where I have money already locked in and when that matures, I get bulk money because usually bonds have minimum investment (>1L) so I then invest that money I get from bond redemption into another bond so my debt instruments are also covered.

Now all the above is separate from my EPF and VPF which I never even see in my account since it is deducted before my salary hits my bank account.

Gist is, equity is great money maker and patience is rewarded but debt instruments are also important.
 
Rockfella said:
Do whatever you do but don't do that 10k per month get crores after 10 years thing. It is a big long term scam/net to lure customers in and keep them trapped for life. Avoid agents they are just good salesmen selling what they want to sell nothing more.
If you are thinking very long term invest in Index fund. Your APR will be same as our economy averaging 15-16% since decades. Do your research and don't pay any brokers/middlemen.
Click to expand...

Also if OP or anyone is taking term insurance do not opt for "pay only for X years but be covered till 60 years or so" plans. These are limited payment plans and should not be taken since term insurance premium is constant so today if it is 10k pe year, it will be same even after 10 years for you who already took the term insurance. But the purchasing power of 10K will reduce in 10 years so giving them the money via limited payment plan is not adviced.
 
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