Which Is The Best Plan For Child Investment
Updated On Jul 12, 2022
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Children are the world to parents and they strive hard to give them the best. When it comes to their education and financially securing their future, timely investments need to be the top priority. The rise in education costs makes it important to invest for your child.
Best Child Investment Plans For You
Sukanya Samriddhi Scheme (Post Office)
The Sukanya Samriddhi Scheme is an Indian government initiative that encourages the parents to save for their girl child. The account can be opened at any post office till your daughter attains the age of 10 years. The minimum deposits are of Rs. 1000 and the maximum deposit of Rs 1.5 Lakh can be invested in this scheme every year.
The deposits can be made till the girl child attains 14 years and the maturity period of the account would be 21 years from the day of opening of account. The rate of interest is 8.6% that is compounded yearly. The scheme also allows partial withdrawals after the child attains 18 years of age.
Make Investments in Gold
Gold always acts as perfect hedge against equity and during times when the markets are volatile. Parents make investments in gold in the form of ETF or E-Gold or gold mutual funds. Experts advice to avoid investments in physical form of gold to reduce the risk associated with physical storage of gold.
Invest in Equity Mutual Funds
Equity mutual fund deposits rank high among the Children’s Investment Plan. The two main reasons for the same are the longer time frame of 10-15 years and the investment mode available. Equity funds have always had a history of generating about 12% to 15% as annual returns.
Investments via Recurring Deposits
If you are looking for a low risk investment plan for your children’s future, then parents can consider recurring deposits as the interest rates for these are at a peak. One can lock the RDs and plan for your child’s future. Recurring deposits are offered by both banks as well as post offices in India. For example, an investment made of Rs. 1000 per month can fetch you Rs 2 Lakhs after 10 years. The official website of Indian post office also has a tool to check the returns that you can expect based on your monthly investment.
Investments in PPF
If you are looking for a long term investment plan, choose PPF where the funds can be locked in for a period of 15 years. A minimum of 1 Lakh can be invested per annum and the rate of interest is 8.75 % per annum. PPF accounts can be opened via Post offices or banks.
Investments in NSC
NSC or National Savings Certificate is the best and a proven method of saving for your child’s education. National saving certificates can be bought for a period of 5 years and the same can be reinvested on maturity. The present rate of interest offered is 8.10% and one can buy a certificate with is as less as Rs 100. The investments that are made of Rs 1 Lakh per annum also qualify for the IT rebate under the section 80C of Income Tax Act.
Invest in ULIP
Though many do not prefer ULIP schemes, these are ideal choices for the low risk investors. One can expect returns of about 4% to 6% annually from any of the ULIP schemes. But do remember that ULIP schemes need to be the last option when compared to the other child investment plans that are available.
Conclusion
Do remember not to just invest in one scheme. Also, do not fall in the trap of insurance agents who might promise higher returns and encourage you to invest in wrong schemes.
Apart from financial investment, parents should also invest in building the skill sets of their children. Teach the concept of money to your children and encourage them to save for their own goals.
Also read: Assured Child Education Savings Plan
