[kalpeshc]

Originally Posted by neoonwheels

Nice thread. I recently got married. Looking at the education fees (My niece is in 1st and her fee is 15K for a year. I had 20K for doing masters), looks like I need to plan beforehand. We are planning a child after 2 years but then I guess looking at education expenditures, I should start saving for my child early .

Believe me, in hindsight I should've done the same. Please don't take this lightly and start investing right away - you will appreciate it after 20 yrs ! Almost all the top financial advisers believe very strongly in the power of compounding. An early start would help this in a BIG way.

[nkapoor777]

Originally Posted by rkg

I meant the same. parents should insure themselves with a term policy to secure kids future.

Originally Posted by rkg

Insurance is meant to be Insure one against RISK of loss of life.

It was never meant to be a investment tool in my opinion

Take huge term policy to secure kids future. Never ever take money back( Children policies are nothing but a variant of this), endowment policies. returns are lees than FD /PF

Invest the remaining amount in PPF if your are risk averse or invest in MF

The overhead charges of Insurance companies are much more than MF's

MF's can not charge more than 2% as AMC fees per annum. where as Insurance companies charges 20% of premium as fee in the first year and around 4% every year onwards. this will automatically result in less amount being invested and hence less return's

I completely agree with rkg. All the insurance plicies including the fancier avatars (read Ulips) are a big rip-off. They do help create wealth, but only for your agent and the insurance company, and may be yourself but to a lesser extent.

Term Insurance is the simplest and cheapest form of insurance, and as rkg said, Insurance and Investment should never be mixed together. They serve two very different purposes.

My take - Take a term policy whose payout in the unfortunate event of either/both parents demise can still provide the same lifestyle to the dependants that they would have had in your presence. Then, divide the rest of the investible surplus in a judicious mix of equities (direct and equity mutual funds), debt mutual funds, fixed income (FD, PPF, NSC, etc) and Gold. Contact a Certified Financial Planner, their consulting cost is a good investment to a happy future.

Happy parenting/investing/wealth creation!

[phamilyman]

+1 to NK saab. Don't mix both things. Ever.

Remember, if there's someone whose a BIG corporation trying to sell you a bundle, you can buy both separately, at a lot less.

[kalpeshc]

@ashdivx - Sorry to revive this old thread - but what did you finally invest in?

I am looking out for investments for my 2 week old newborn!

[ashthedivx]

Being confused with all this jargon finally purchased a land piece of around 300 Sq. Yards and opened up a PPF account in his name.

As advised DO NOT FALL FOR ANY PVT INSURANCE PLAN !!

[navin]

Originally Posted by Sam Kapasi

Your little boy is 3 days old.
What has the world come to?

Sam our son had a website (on pbase) when he was 4 days old. Financial planning for him (by his maternal grandfather) started probably before he was conveived.

Originally Posted by phamilyman

+1 to NK saab. Don't mix both things. Ever.

Remember, if there's someone whose a BIG corporation trying to sell you a bundle, you can buy both separately, at a lot less.

Absolutely.

Any prudent investor would have a mix assets. The exact mix would depend on the person's current assets, risk appetite, and current and estimated future incomes.

However I would consider exposure to the following:
Equity: Large cap, A group, with reputed management reviewed once in 6 months.

Mutual Funds: Diversified Equity Large cap and depending on the conditions this money can be moved to debt funds (when interest rates are high say 17-18%). In current market conditions one can even opt for a STP from a Liquid fund or delay this till March '09. The advantage of using MFs is that you get a basket of shares/debt and one can enter and exit schemes without exit/entry load penalties and thereby shift your portfolios focus easily and limited punitive damages.

Gold ETFs: ETFs are easier to manage and offer more liqidity

Real Estate: REITs are still not available in India so one would need to stick to direct purchases. I do not advise any exposure to the current crop of companies invovled in real estate.

FDs and child schemes: I am not conversant with either of these but I would look at these only if they offer inflation adjusted annualised returns of 5%+. FD protect capital (if with large nationalised banks like SBI), few investments offer this.

[kalpeshc]

Originally Posted by ashthedivx

Being confused with all this jargon finally purchased a land piece of around 300 Sq. Yards and opened up a PPF account in his name.

As advised DO NOT FALL FOR ANY PVT INSURANCE PLAN !!

That looks like a smart, safe and simple things to do. Also, do you mean avoid all insurance plans in general or just 'private' insurance plans?

Between a PPF and a recurring deposit with a nationalized bank, which would be better and what are the differences?

Sorry but I am not very conversant with financial matters and hence the confusion

[NetfreakBombay]

Originally Posted by kalpeshc

avoid all insurance plans in general or just 'private' insurance plans?

Between a PPF and a recurring deposit with a nationalized bank, which would be better and what are the differences?

Avoid ANY insurance plan that clubs investment, does not matter if its from private player or from LIC/India Post.

PPF is completely tax-free, while RD will attract tax on interest. But unlike PPF, RD would not have any lock in.

In this situation, PPF or Mutual fund investment with SIP might work out better if you are looking for 15 years time. E.g. to take care of collage fees of kid. And in this case, lock in would be actually a good thing.

Apart from this, DO take insurance that will guaranty education and other expenses in an unfortunate situation. A 30 lakh cover should cost more then 10,000 Rs. per year.

[ashthedivx]

Originally Posted by kalpeshc

That looks like a smart, safe and simple things to do. Also, do you mean avoid all insurance plans in general or just 'private' insurance plans?

Between a PPF and a recurring deposit with a nationalized bank, which would be better and what are the differences?

Sorry but I am not very conversant with financial matters and hence the confusion

Well, hard to swallow but everyone is here to make money. Better avoid any type of insurance plan, if you are too much prudent of getting insurance policy get a no frill insurance of 25 lakh from LIC of yours. In case something happens to you, loved ones can be compensated with financial loss atleast.

PPF - You have a liability of mere 500/year which you can submit according to your convenience during anytime of a financial year, tax benifit while submitting the PPF amount and tax rebate at the time of withdrawl as well. Cons are too there like a lock-in period of 15 years. Though at the max you can deposit 70K in a financial year.

Recurring Deposit - You have a liability to submit a fixed amount every month. I ain't too much sure of taxation part of Recurring deopsit account.

You might want to go throught the entire trhead to have a better understanding why i chose PPF over various policies.

[kalpeshc]

I think, PPF does not have a lock in of 15 yrs. You can withdraw some amount after 3 yrs isn't it? Also, if the PPF is in your son's name, you won't get tax benefits. Or you may have created the PPF account in your name with your son as a nominee. Also the 70K is not a limit. You can deposit as much as you want in PPF but 1L would be the max (someone please confirm this) for which you will get tax benefits.

[ashthedivx]

Originally Posted by kalpeshc

I think, PPF does not have a lock in of 15 yrs. You can withdraw some amount after 3 yrs isn't it? Also, if the PPF is in your son's name, you won't get tax benefits. Or you may have created the PPF account in your name with your son as a nominee. Also the 70K is not a limit. You can deposit as much as you want in PPF but 1L would be the max (someone please confirm this) for which you will get tax benefits.

Had done enough homework before investing

STATE BANK OF INDIA :: INDIA's LARGEST BANK

Public Provident Fund Scheme

[kalpeshc]

Apologies for doubting you

I have been misinformed. Thanks for the info though.

[ashthedivx]

Originally Posted by kalpeshc

Apologies for doubting you

I have been misinformed. Thanks for the info though.

Never mind

Happy Parenting !!!

BTW: Did you finalized any name so far

[kalpeshc]

Nope :(

Still as confused as day 1 when i started that thread !!!

[BenjiRoss]

NDTV profit is RIGHT NOW showing a program about this - catch it if you can for some tips.