How To Multiply Your Savings With Child Plans?

Every parent wants their child to have the greatest education possible without facing any financial obstacles. Due to this, it is crucial for parents to make the best investments possible to cover their children's educational costs and safeguard their future. This post is for you if you're seeking some investing choices for the future of your kids. Financial Express Online has compiled a list of the top seven child investment alternatives with the assistance of specialists.

Different Forms Of Investment For Your Child

Below are some of the different types of investment that help you multiply your money for your child:

• Child Insurance Plan

A life insurance plan called a child education plan serves the dual purposes of providing you with a life insurance policy and growing your funds. At the end of the plan term, you receive a sizable maturity sum for your children's educational expenses.

A child insurance plan is a type of investment and insurance plan that guarantees financial security to achieve your child's long-term educational ambitions. The maturity value of a child insurance plan can be used for a variety of purposes, such as paying for your dependent's marriage or sending him/her overseas for higher education.

• Non-convertible debt securities and corporate deposits (NCD)

There are numerous investment opportunities that can multiply money by two. Business deposits are one of them. In comparison to bank fixed deposits, Non-Banking Financial Companies (NBFCs) and Corporates offer great options for investment.  Other forms of securities would be NCDs i.e. Non-Convertible Debt Securities and corporate deposits. As the name suggests, these are debentures that cannot be converted into shares or equities. 

Based on ICRA ratings and the deposit's tenure, the rate of return for these deposits ranges from 9 to 10%. The time it would take for the investment in this strategy to double is about 8 years. Companies issue corporate deposits, whereas NCDs are issued by businesses that also include NBFCs.

• Certificates of Savings National

One of the safest investment options is a National Savings Certificate (NSC), which is issued by the Indian Postal Department. These certificates feature fixed terms of five and ten years, as well as a fixed interest rate that is based on the term.

Under Section 80C of the Income Tax Act of 1961, National Savings Certificates are exempt up to Rs 1,50,000. Additionally, there is no TDS applied to the sum received when the scheme matures. The ability to obtain loans from any bank is another advantage of investing in NSCs.

• Fixed Deposits In Banks

Banks' fixed deposits are a well-liked form of investment. Up to Rs, 1 lakh in fixed deposits are insured by the Reserve Bank of India (RBI). Following the recent RBI repo rate decreases of 0.50% (0.50 bps), a number of banks have reduced interest rates for fixed deposits by 0.25% to 0.50% annually.

• Government Provident Fund (PPF)

Another well-liked and dependable investment programme offered by the government is Public Provident Fund, or PPF. A minimum annual deposit of Rs 500 is needed to invest in PPF. The 15-year lock-in duration for this plan. A salaried, independent contractor or government employee can invest in this plan because it has the lowest contribution when compared to other savings plans. 8.75% is the annual rate of return that is being promised for the fund's specific year. The maturity amount will double in about 8 years, and after the lock-in period, the money will increase several times over.

• Investment funds (MFs)

There are many mutual funds, including, to name a few, ELSS (Equity Linked Savings Scheme), debt- or equity-focused, balanced, or hybrid mutual funds. Mutual funds provide a higher rate of return than other alternative investment tools, although carryinga great market risk. The duration of the investor's chosen mutual fund affects the rate of return. Rates of return for long-term mutual funds range from 12% to 15% annually. It will take roughly 5 to 6 years to double your money with mutual funds.

• Gold ETFs

In India, gold is a highly desirable commodity. This yellow metal is a fantastic investment option. Exchange Traded Funds (ETFs) for gold were introduced in India in 2002.  One of the simplest ways to invest in precious metals, it offers an annual return rate of 22%.

Conclusion

A financial investment in your child's skill development is also advisable. It might be anything that can help your child in the long run, including digital media, athletics, or the arts. Additionally, explain the value of money to your child and encourage him to save money for his own aspirations. He'll learn the value of money thanks to this.     

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