[akshaymahajan]

What about gifting stocks? I was pondering over this idea for my niece - just put in some money across 3-5 stocks I think will do well over the next two decades. And they are hers who she turns 18/21 and she can decide what she wants to do with the money. Depending on how much it adds up to at that time, she can use it for down payment of a house or college or to travel. If its 0 by then, too bad niece.

[Satkaj]

I had opened a minor account for my daughter when she was 10yr old and now she is 19, so made her main account holder with us as a joint holder. I use to deposit fixed amount every month I use to receive as rent . Which is transfer from my account to her making it free of tax going forward.

I had opened 2 Demat account on my name in which I use to buy shares from above bank account and have not touched them, now transferred to her as main holder . This has given me some head start plus also allows me to involve my daughter slowly in to managing her financials. I also have PPF account on her name in which keep depositing available cash whenever possible.

[SmartCat]

I don't think separate financial planning & investment for children's future is needed. Just allocate whatever is needed from your own networth. Just that, closer to time when the funds are needed, move money from high growth investment avenues (eg: real estate/stocks etc) to safer investment avenues (FDs, liquid funds etc).

I think this concept gained traction because of marketing by banks and financial institutions -> deposit accounts for children, mutual fund children's plan, insurance (ULIP/money back) children's plan and so on. They are cleverly packaged & designed to tug at our heart strings. It has given an impression that making a specific financial/investment plan for children's future is absolutely required.

[Naetik30]

Originally Posted by deathwalkr

I think that having those investments in your child's name makes you a bit cautious when it comes to closing said investment for some random expense that comes up.

Well, thats a different problem all together. But, this would cause more problems than it solves.

Better would be to have a financial plan that works for all your goals. And move the assets to right instruments at the right time. For example, for college fees, once your kid is in X grade move the funds from equity to debt or FD.

For myself, I invest in equity funds for all my goals. And plan to pull out some for my son's college in next few years to FDs. I also have 2 plots ear marked for the same purpose, in case the markets are not in a good condition. This is a backup. But all these are in my name and not in my son's name.

[DigitalOne]

Originally Posted by SmartCat

I think this concept gained traction because of marketing by banks and financial institutions -> deposit accounts for children, mutual fund children's plan, insurance (ULIP/money back) children's plan and so on. They are cleverly packaged & designed to tug at our heart strings.

I saw an egregious example of this just yesterday while writing about Balanced Hybrid funds in the "Mutual Funds" thread.

Out of 6 funds in this category, 2 are marketed as "Retirement funds/Pension funds" while one is marketed as a "Children's career savings plan"! Incidentally, the "Children's..." fund has the highest expense ratio and lowest 1 year return but with an emotional name, they probably don't expect the parents to look at such mundane things like expenses or returns .

[DDIS_RE650]

Small Cap and Mid Cap two SIP dedicated for both kids. We will not touch till they are 25+, it is our responsibilities for their higher education and wedding.
The mature amount will help them post marriage when they need to buy a good house or any major expense. We as a parents should help them to settle down, we do not want them to take major loan while settling down.
Same thing done by my parents for my sister and me.

[jaysheth]

Originally Posted by raksrules

I have invested in PPF but ideally I should have done it in my kid's names instead of mine and wife's. Due to this, I cannot open any more PPF accounts. I am not sure if PPF account can be transferred to someone else's name but mostly cannot.

1. You have done nothing wrong. You can very well open a separate PPF account for your child, but the total investment amount in both your + your child's account cannot exceed the max limit (currently 1.5 Lakhs per annum).
2. In my case, I have chosen not to open a separate PPF account for the child, due to the reason above (there is no extra benefit). If it is a girl child with age below 10 years, do consider opening a separate Sukanya Samriddhi Account.
3. No, PPF account cannot be transferred to anyone else. You can only add a nominee (to receive the sum post your demise)

[libranof1987]

Originally Posted by SmartCat

I don't think separate financial planning & investment for children's future is needed.

+1

Rather yes and no.

One section of society moved from lower / middle class to upper middle class over the course of the last couple of decades, which allowed them to not have to worry about how they'd get their daughter married off at 18, or pay for the son's higher education.

For this demographic, there's no real need to earmark funds separately.

But at the same time, a different demographic is in that space that can dream of giving their kids a good future, and hence, prefer access to Govt. schemes such as SSY, or children-specific investment schemes.

Several people I know also have demat accounts for their kids; some even have a PPF account for them (while also maintaining one for themselves!). Eventually, I think it boils down to the time / effort / risk appetite you want to spend. Some might roll in a lot of money but prefer such schemes just because they don't have the time / inkling to make smart investments?

That said, I do feel enrolling in SSY if you have a daughter is a very good-to-do activity. Yes, the RoI is only 8% but it is a safe investment, and compounding can do wonders over 21 years, if you start right at her birth.

[SuperGirl_Dad]

Originally Posted by libranof1987

Just a quick suggestion: if you have a daughter, the Sukanya Samruddhi Yojana is a good investment scheme. Available just for the girl child, you can invest between Rs. 250 to 1.5 lakhs / year for 14 years. The amount can be withdrawn when she reaches 21 years of age (premature withdrawal allowed for marriage at 18). Current RoI is 8%.

Originally Posted by libranof1987

+1

That said, I do feel enrolling in SSY if you have a daughter is a very good-to-do activity. Yes, the RoI is only 8% but it is a safe investment, and compounding can do wonders over 21 years, if you start right at her birth.

Thanks for your insight. Seems this scheme is not valid for NRIs . Do you have any recommendation for NRIs along the similar scheme.

[Kaydee55]

Originally Posted by jaysheth

[You have done nothing wrong. You can very well open a separate PPF account for your child, but the total investment amount in both your + your child's account cannot exceed the max limit (currently 1.5 Lakhs per annum).

Are you sure for this ?

Few days back, I opened a PPF account in name of my daughter who is few months shy of turning 7 with her PAN number. As per my understanding I can deposit max 1.5 lakhs in my PPF account and same in her's each year.

Only limitation is that for income tax purpose I can only claim deduction for Rs.1.5 lakhs deposited in my PPF. If daughters PPF account is linked to parents PAN then only 1.5 lakh can be deposited combined in both but in our case she got her own PAN.

[Rajeevraj]

One kid specific investment is the Sukanya Samrudhi Yojana. Have set a monthly transfer to the SSY account in her name which adds up to the max allowed. Reasonable return and a safe investment. Rest of it is generic-Some portion of SSY and my own investment I hope will fund her education.

Also have a bank account in kids name and do a token amount transfer every month. This is not really a major investment effort. At some point will hand it over to her to manage.

[sreerknair]

Originally Posted by Kaydee55

As per my understanding I can deposit max 1.5 lakhs in my PPF account and same in her's each year.

Only limitation is that for income tax purpose I can only claim deduction for Rs.1.5 lakhs deposited in my PPF. If daughters PPF account is linked to parents PAN then only 1.5 lakh can be deposited combined in both but in our case she got her own PAN.

Hi Kaydee, so were you able to deposit to your daughter's account beyond 1.5L in your account? My understanding too was that combined only 1.5L is permitted. But if you were indeed able to deposit 1.5L each, please let me know.

[The Rationalist]

I think a separate plan is not needed if you are very systematic and grounded parent. What I'm doing for both my kids are given below.

1) got a PAN Card as soon as they were born.
2) started a banking account in their names
3) started PPF account for both, SSY was not there at that time
4) investing in PPF for 15 years, and start an NPS account as soon as they turn 18.
5) Mutual funds for their higher education if everything goes fine.
6) got my 9 year old her own debit card, she has some savings from her grand parents and from me. She is being trained to use it for her school fees, books, sweets etc under our supervision so that she learns how banking works and also to make her know how much money is being spent on education, canteen, transportation. I think it's very important to involve them in the basic financial things. She knows how to pay her school fees using her debit card (ICICI Bank now offers debit card irrespective of age, earlier it was 7 years).

[The Rationalist]

Originally Posted by Kaydee55

Are you sure for this ?

Few days back, I opened a PPF account in name of my daughter who is few months shy of turning 7 with her PAN number. As per my understanding I can deposit max 1.5 lakhs in my PPF account and same in her's each year.

Only limitation is that for income tax purpose I can only claim deduction for Rs.1.5 lakhs deposited in my PPF. If daughters PPF account is linked to parents PAN then only 1.5 lakh can be deposited combined in both but in our case she got her own PAN.

As per PPF rules a family of 4, parents and 2 kids can have 4 PPF accounts and the maximum allowed is ₹3 L. The only loophole is by having 4 different PAN numbers and putting ₹6 lakh. If system detects, you will be fined 1% for the excess amount. Depends on your stomach to take that risk. The best way would be to open the accounts in 4 different banks and hope that you don't get detected! With 7.1% returns it's not wise to invest only in PPF, it hardly beats the inflation by 2% even if you are in 30% tax bracket!

[vj_torqueaddict]

Originally Posted by am1m

My wife and I paid for our own wedding. We had to wait a bit longer till we had the money, we had to invite far fewer people, and yes we pissed off both our sets of parents! It's a family joke that my mom is not smiling in any of the wedding snaps because she wasn't allowed to pay anything and we had to trim her guest list a lot.

This! Same here. My wife and I got married on our own. Simple wedding without any extravaganza. I didn't want to spend on people that I don't like. It was more of a formality. We saved that money for us, to roam the world.

No kids yet. Don't plan on saving any money for wedding. I have already kept aside degree education amount in GILT fund. That's about it. Rest the kid will be on their own. Just like my wife and I were. My wife even more so.