While planning a financially secure future for your grandchildren might be overwhelming, investing wisely is necessary. You might run out of ideas if you are not prudent. Investing in a child plan for your grandchildren through insurance is a wise decision. Read more about the best child plans that the experts recommend to responsible grandparents.
With inflation and financial uncertainties looming around, it makes sense to be strategic with your investment plans. Purchasing insurance for your grandchildren and securing their higher education with an RESP seems to be logical decisions. However, you need to be practical with your investment strategies.
The experts have recommended the right tactics to help you plan your investments and A Secure Future.
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Planning a financially secure future for your grandchildren
Here are some ways you can invest intelligently to ensure a financially secured future for your grandkid:
1. Start accumulating funds early
Well, have you been waiting for your grandchildren to reach their primary schooling stage before you start investing? That would be a potential mistake on your end. Starting to accumulate funds relatively late can compel the kid to make sacrifices when they go for higher education. The best way out is to start investing early.
Remember, education in Canada has been growing expensive over the last decade. Therefore, it would be a logical decision for grandparents to invest right at the time of the child’s birth.
Investing early also endows you with the freedom to go for relatively risky instruments for better returns. This way, you would have enough time to rectify your investment decisions, if needed. Among the low-risk options, you should definitely count on child insurance.
2. Consider the child’s goals
While planning the finances, consider both the short and long-term goals. Simply segregate the financial goals depending on the needs. While short-term goals involve expenses within the next couple of years, long-term goals encompass requirements even after the child matures.
Long-term goals mainly involve the admission fees for colleges and universities, expenses for studying abroad, and marriage expenses. Parents can start investing for both short-term and long-term goals. Equity investments can be considered for long-term goals, which offer moderate risk with good returns.
3. Purchase whole insurance for your grandchildren
Life insurance happens to be a robust investment that can serve the kid even after they reach college or university. It secures the person on different fronts, ranging from health to education. While selecting a plan, make sure to consult an expert to understand the terms and conditions.
Besides, it would be wise to choose a policy to help you get tax waivers. Insurance is a safe and effective investment strategy for grandparents. With a whole child insurance policy, you can warrant the availability of funds even during the person’s higher education and marriage.
4. Investments with partial withdrawal plans
Investing in your grandchild’s future happens to be a long-term goal. Maybe, you would be planning with a time frame of 15 to 20 years in mind. Look for instruments that assure security along with flexible lock-in periods.
In case you go for a long-term investment, check out the provision of making partial withdrawals when needed. This will serve your grandchild’s educational purposes and other requirements if the need arises. Otherwise, you might regret investing in schemes that would prove futile during emergencies.
5. Consider appointing a nominee
Being a responsible grandparent, you should appoint a nominee for whatever you invest for your grandchild. Unfortunately, many investors ignore this part while channelizing their funds. Missing out on a nominee might lead to complications in withdrawing the amount if any unfortunate event befalls your grandchild. Also, think of a reliable person within your family when you decide on the nominee.
Planning your grandchild’s higher education with an RESP
As you know, most parents and grandparents make significant savings for their children’s higher education with an RESP (Registered Education Savings Plan). With this scheme, the Canadian government will assist you in making savings for the child’s higher education.
The RESP would help your grandchild receive the following benefits.
- The Canada Education Savings Grant
- The Canada Learning Bond
- Other incentives for provincial savings on education
The government adds an amount through the Canada Learning Bond to the RESP for kids born in 2004 or later. In case of a financial crunch, your grandchild can benefit from this scheme. While the initial payment would be $500, the child would get an additional $100 each year, depending on the eligibility. The maximum eligible amount is $2,000.
Benefits of investing in a child insurance policy
Investing in a whole child insurance policy is a way to A Secure Future and happens to be the only tax-free gift for grandparents. Once you invest in this policy, the cash value will keep growing throughout the life of your grandchild without any tax implication. Besides, the child would earn dividends, which are also free from tax.
Now that you know the benefits of investing early, you can open a policy for your grandchild even after a couple of weeks after birth. If you are aged above 64, you have the option of funding the child plan with RRIFs or RRSPs.
Most importantly, you would have complete control over the cash value until you transfer the ownership to your grandchild. There would be no tax implication or fee on this transfer either.
Evidently, you can transfer funds to your subsequent generation to manage higher education or marriage costs in the long run.
A whole child insurance policy would be the safest among all the investment instruments that can help you accumulate funds for your grandchildren. These plans provide considerable flexibility while still meeting the financial demands of the child. Of course, you can also make other investments, such as an RESP, in addition to this.
Consulting an expert before finalizing your decision is highly recommended. When you invest in something as sensible as your grandchild’s insurance, professional assistance can help you make an informed decision.