Should I Invest in ULIPs, Bonds or Mutual Funds for My Two-Year-Old Son’s Education?
In order to provide your child with an education, you might have to build a huge financial corpus. There are various investment options that can help you accumulate the money. Therefore, it is crucial to choose the option that can benefit you.
In this article, we will explain how ULIPs, bonds, and mutual funds can help you accumulate funds for your child’s education.
The cost of education can be expensive. Therefore, it is important for parents to save for the education of their children. There are different investment options like ULIPs, bonds, and mutual funds that can help people build a substantial financial corpus for their children’s education. But which option is better?
A unit linked insurance plan (ULIP) is a unique insurance policy that provides the benefit of insurance as well as investment. With the help of a ULIP, you can accumulate funds and get life cover. A part of the premium goes for life cover. The other part is invested in investment instruments like equity funds, debt funds, etc.
In case the policyholder passes away untimely, the insurer can provide the insured person’s family with a sum assured. Therefore, a policyholder can secure his/her family with the help of a ULIP. Furthermore, a ULIP can be beneficial if a person is looking for a long-term investment option because it can help him/her build a huge financial corpus. A policyholder can also switch between the funds based on his/her risk appetite. Therefore, a unit linked insurance plan can help a person save for his/her child’s education and provide protection if he/she meets with an untimely demise.
A bond is a fixed income instrument. It is a debt security. Therefore, it is a safer investment option. It can provide the investor with good returns. However, the returns might be lower compared to equity funds. But investing in debt funds can be safe.
Mutual funds are a great investment option in order to meet long-term goals. You can invest in them based on your risk appetite and objective. There are different types of mutual funds, such as equity mutual funds, debt mutual funds, etc. Equity mutual funds are beneficial in case you are looking to invest for a longer time. Therefore, they can help you build a substantial corpus for your child’s education.
An investor needs to keep in mind his/her risk appetite before investing in equity mutual funds. For example, if an investor has a high-risk appetite, then he/she should consider investing in small-cap or mid-cap schemes. Furthermore, an investor can easily switch between the funds.
Which Investment Option is Better?
An investor can select multiple investment options based on his/her requirements. For example, a person can invest in life insurance to secure his/her family. He/she can also invest in mutual funds in order to build a financial corpus. Furthermore, a person can invest in a ULIP to get life cover and accumulate funds.