Most parents,
especially those from the lower middle class and middle class who earn a
sufficient monthly income, do not actually think about their child's future.
They live comfortably by managing monthly expenses, dining out, and going on
picnics, but they don’t plan for their child's future needs like marriage and
education expenses. As a result, they often end up taking loans and repaying
them up to their retirement, depleting their savings. Therefore, it is always
better to plan properly for children's education and other expenses, so that
after retirement, individuals can live without any tension or financial burden.
Choosing the best child
investment plan in India depends on various factors, including your financial
goals, risk tolerance, and investment horizon. Here are some of the top child investment
plans available in India:
1.
Public Provident Fund (PPF):
Description: A
government-backed, long-term investment scheme with tax benefits.
Key Features:
15-year lock-in period.
Interest rate around
7-8% per annum, compounded annually.
Tax benefits under
Section 80C.
Click here for more information…
2.
Sukanya Samriddhi Yojana (SSY)
Description: A savings
scheme aimed at securing the future of the girl child.
Key Features:
Can be opened for a
girl child below 10 years.
Lock-in period until
the girl reaches 21 years.
Higher interest rate
(currently around 7.6%).
Tax benefits under
Section 80C.
Click here for more information…
3.
Unit Linked Insurance Plans (ULIPs)
Description: A
combination of investment and insurance.
Key Features:
Lock-in period of 5
years.
Investment in equity,
debt, or balanced funds.
Life cover included.
Tax benefits under
Section 80C and Section 10(10D).
Click here for more information…
4.
Children’s Mutual Funds
Description: Mutual
fund schemes specifically designed for child’s education and future needs.
Key Features:
SIP (Systematic
Investment Plan) option available.
Equity, debt, or
balanced fund options.
Long-term growth
potential.
No lock-in period, but
advisable to stay invested for long-term.
Click
here for more information…
5.
Recurring Deposits (RDs)
Description: Bank
deposits where you can deposit a fixed amount every month.
Key Features:
Fixed interest rate
(around 6-7%).
Flexible tenures (1 to
10 years).
Safe and low-risk.
Click here for more information…
6.
National Savings Certificate (NSC)
Description: A
fixed-income investment scheme.
Key Features:
5-year lock-in period.
Fixed interest rate
(around 6.8%).
Tax benefits under
Section 80C.
Click here for more information…
7.
Child Plans from Insurance Companies
Description:
Specialized insurance plans focused on securing the child's future.
Key Features:
Offers a combination of
savings and insurance.
Provides lump sum
amount at key milestones.
Premium waiver in case
of policyholder’s demise.
Click
here for more information…
8.
Gold ETFs and Sovereign Gold Bonds
Description: Investment
in gold through financial instruments.
Key Features:
Hedge against
inflation.
Sovereign Gold Bonds
offer additional interest.
Long-term capital
appreciation.
Factors to Consider
Investment Horizon:
Longer horizons can tolerate higher risk for potentially higher returns.
Risk Tolerance: Choose
between equity (high risk, high return) and debt (low risk, stable return)
based on your comfort.
Tax Benefits: Utilize
schemes offering tax deductions under Section 80C, 10(10D), etc.
Liquidity: Ensure the
investment can be accessed when required for the child's education or other
needs.
Click here for more information…
Conclusion:
Combining multiple
plans can help balance risk and returns while ensuring financial security for
your child’s future. Consulting with a financial advisor can also help tailor
the best investment strategy for your specific needs.
