Should we do Children's NISA? How to prepare for education funds at home

Children's NISA will start from January 2027. The main use is to prepare educational funds, but which one is better than the conventional deposits and educational insurance? We will consider how to prepare for each family.

There are various options for preparing education funds.

Children's NISA is for ages 0 to 17 and allows you to invest up to 600,000 yen a year in an account in your child's name. This will be achieved by removing the age limit for the NISA savings investment limit, which was for people over 18 years old.

In addition to the Children's NISA, there are other ways to prepare for education funds, such as term deposits, personal government bonds, and educational insurance.

Educational endowment insurance has become less attractive due to long years of low interest rates, but with recent rises in interest rates, things are improving. Currently, there are products that offer return rates ranging from around 110% to a maximum of 130%, which is the ratio of the money you receive to the premiums you pay. A representative from a major life insurance company said, ``The return rate is expected to continue to rise.'' Please note that if you cancel your contract midway through, you may lose your principal.

Government bonds for individuals are also attracting attention due to rising interest rates. 2.05% annual interest rate for October offer with 10 years variable period. One year ago, the October 2025 offering was initially 1.08%.

What criteria should I use when choosing among various financial products?

Financial planner Kosuke Yoshikawa recommends organizing your asset allocation based on the timing of your need for the desired funds and your household's financial strength to withstand risks such as market fluctuations.

Families suitable for investment have certain conditions, such as: 1) stable income, 2) the ability to invest for at least six years until entering high school or university, and 3) a certain amount of savings to support one's lifestyle and achieve one's goals. The goal is to cover six months of living expenses, and the funds needed to reach the goal include the down payment for a car or house.

For those who find it difficult to operate for more than 6 years...