If you are a parent, then you will naturally dream of a more prosperous and happier future for your kids. This may include their higher education and careers, along with weddings and other life goals. However, it should be stated in this context, that financial planning has a big role to play in accomplishing these objectives smoothly. The earlier you start your investments for these purposes, the longer they can grow and steadily compound as well. There are diverse child investment plans that you can pick from. Here is a guide to picking the best child plan for investment.
-
Public Provident Fund (PPF)
The PPF is known to be one of the safest and most trusted investment avenues in the country. The scheme is supported by the Government and you can get an assured return on your investment accordingly. At the same time, there are also tax benefits that are available under Section 80C (your contributions) and also on the interest income and maturity amount. The rate of interest currently applicable on PPF stands at approximately 7% per annum, while there is a 15-year lock-in period for the same as well. Hence, this is a key reason why most individuals find the PPF to be a viable and value-worthy investment option to save for their children’s higher education needs.
-
Sukanya Samriddhi Yojana (SSY)
The SSY is a handy scheme, particularly for those who are parents of girl children. The scheme is tailored to maximize benefits for girls and comes with an attractive rate of interest (around 8% currently). You can invest on behalf of your daughter from up to 10 years of age and when the plan matures (when she turns 21 or plans to get married), she can use the funds for various purposes.
-
SIP: Mutual Funds
Investing in mutual funds through SIPis ideal if you want to earn better returns while being okay with market risks for your finances to grow over a long period. Historically, equity mutual funds which involve investment in the stock market for long-term investments provide high returns, but the risk is still high due to market fluctuations. On the other hand, the less risky option – hybrid funds, invest in debts and equity, making it more stable with an equal opportunity for investment growth.
-
Child ULIPs (Unit Linked Insurance Plans)
ULIPs are an investment cum insurance. A child-specific ULIP provides financial protection for the life of children in case there is an untimely death ofa parent and also builds up an investment that can grow over a while. They are flexible investment options that allow you to invest in both equity and debt funds aiding growth. However, the cost can be more expensive than other investments, which is why you must choose a low-cost plan.
-
National Savings Certificates (NSC)
National Savings Certificates are government-shared savings bonds, especially used for their tax-saving benefit. It has a lock-in period of 5 years, and the current interest rate is around 7.7% providing steady, safe returns. While the returns may not be as great in comparison to equity-linked options, NSC is a good additionto diversified portfolios with security and tax efficiency.
In the end, investing in your child’s future is a very important decision in anybody’s life. So, choose the right mix of investment products to match your objectives, risk tolerance, and timeline to ensure that your child’s financial future is uncompromised and safe.
*rewritten multiple times but still same results