Investment Options for Children in India

For many parents, investment options to save money for their children future is an essential financial objective. The call to start investing at an early age and choosing right plans that they want to invest in can make a huge difference whether it is for schooling, marriage or any financial planning they might need. There are a number of investment options presently present in India that are aimed to help parents save money for the future of their kids. Here are a few best-known options for investment.

1. Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana is a female child focused savings scheme launched by the government like a deposit regime to induce parents to save money towards the education and marriage of their daughters. Section 80C of the Income Tax Act allows putting money for getting tax benefits and also you get favorable interest rates among others. Parents of a daughter under the age of ten can open an SSY account, and they can continue to make contributions to the account up to the stipulated age of 21 years.

2. Public Provident Fund (PPF)

Also known as a public provident fund, PPF is an investment plan run by the Indian government that delivers long term savings and carries favorable tax benefits. A supplementary PPF account can be created under your child’s name and parents can deposit in it from time to time regularly. To anticipate rollovers, the single account might be stretched in five year extensions if the initial 15 year investment period exists. PPF is one of the most preferred forms of investment for those looking to build long-term wealth since it allows investors to grow their money without paying taxes on the returns.

3. Unit-Linked Insurance Plans (ULIPs)

These products popularly known as Unit linked insurance plans, they are hybrid products which offer investment on the funds as well as life insurance. In case the parent takes risk level into consideration he/she can choose from a list of funds while investing in ULIPs to accomplish the parent’s child specific future goals. ULIPs offer parents with the key advantages such as comparatively more flexible where the ability to pay the premiums and transferring corpus building funds are concerned.

4. Systematic Investment Plans (SIPs) in Mutual Funds

Using SIP, investors can invest small amounts in mutual fund schemes seamlessly. Due to the long horizon that parents have in mind to educate their child, as well as the risk tolerance, they will be able to decide from where to begin their SIP in debt, the balanced mutual fund, or even equity. SIPs offer the choice of ‘averaging out the cost of price and therefore, if investments are made systematically, helps in creating wealth in the long run’.

5. Child Education Plans

Many insurance companies offer plans for the children’s education, which are designed to cater for the costs of schooling and other education related expenses in the future. These plans ensure that cash will be there in the future when the insurance costs together with the growth of investments will be required in different costs related to higher education.

6. Fixed Deposits (FDs) and Recurring Deposits (RDs)

There are traditional investment products, which act as a substitute for investors seeking guaranteed returns with capital protection are fixed deposits and recurring deposits. Apart from fixed-income products offered by the banks and post office investment schemes, parents can opt to open Fixed Deposit or Recurring deposit in the name of the child. The RDs allow the investors to achieve a certain amount of saving periodically for a predetermined time limit, whereas FDs provide fixed incomes for a certain period of time.

7. Equity Investments

It is very high when compared to investing in stocks or equity mutual funds but the long term returns are large as well. In order to give their child’s money the opportunity to grow to fund the child’s dreams, parents must consider putting some money into stock investment.

Conclusion

When choosing types and forms of investment options for children, one has to consider the factors, including investment time frame, ability to bear risks, taxation, and accessibility of investments. Parents need to make plan so that they can achieve their financial goals reaching out for the future brightness of their children, they should invest and spread their money over several types of securities and check their portfolio often. Financial consultant is something that can be beneficial in giving the personalized consultation based on the current employment status and other specifics when it comes to investing.

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