Every parents want to secure the future of their child against all the unforeseen events. It is a wise decision, as a penny saved is a penny earned. Especially the financial security of a child is one of the major concerns in a middle class family to ensure that the child is able to pursue his or her education, he or she can live up to the dreams and fulfill all his wishes. I think such dream and secured future for a child is shared by every parent like me. The moment child breathes his first breathe, the parents start calculations with respect to the savings and means of more income.
Nowadays, there are so many plans and investment options available that one needs to be very careful as well as clear to choose the best one. This investment plan can differ from person to person based on the funds available for investment, expected returns, time of maturity of the investments, etc. Depending on these factors, one should pick the investment plan that gives the required returns. Among the many plans the market is abuzz with, some of the really good ones are the systematic investment plans or the SIP, monthly investment plans or the MIP, Unit link Insurance plans or the ULIP and mutual funds. These plans comprise of equity investments and secured asset investments like the government securities and alike. The proportion of investment in the stocks and the risk-free assets is directly proportional to the risk taking appetite of the individual.
The risk-free assets do not have heavy returns, but one can assure of some constant and fixed amount (or percentage) of returns in any type of economy. On the contrary, the returns of stocks i.e. dividends and the capital differential is highly subjected to the market movements. If the market crashes, the investment value decreases, however if the market is on a high, then investors have just got luckier with their funds. This is therefore more dependent on the weight of fund you invest on stock market. The good part of such plans is that you are saved from the excercise of searching, analyzing and then investing in the market; however, the bad part is you do not know exactly in which stocks your money is being invested into.
So, there are pros and cons of each and every investment plan. As said before, be careful with your money and invest them in the correct alternative to optimize your returns. If you see the fund value to be lowering, then it is time to revise the mix of stocks and risk-free assets.
About the Author
Rajat Sharma is a well known stock market analyst and commentator. He has covered Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities. Attorney by qualification, Rajat has done extensive work for improving corporate governance and disclosure standards.Follow @SanaSecurities