Every parent dreams of giving their child a stable and secure future, and this often involves careful planning and financial investment. India offers various child investment plans that cater to different financial goals and risk appetites, from low-risk options to high-growth potential investments. With so many choices available, selecting the best child investment plan can be challenging. Here, we present a detailed guide to the top child investment plans in India to help you make an informed decision for your child's financial future.
This scheme is among the best child investment plans in India, especially for girl children. The government initiated this program to promote savings for girls, aiming to provide financial security for their future.
Who can open: Parents can open an account for their girl child until she turns 10.
Deposits: Minimum of Rs. 1000 and up to Rs. 1.5 lakh per year.
Tenure: Deposits can be made until the child is 14, with a maturity period of 21 years.
Interest rate: Offers a high interest rate of 8.6%, compounded annually.
Withdrawals: Partial withdrawals are allowed once the girl reaches 18, aiding in educational expenses or other needs.
This plan is ideal for parents wanting to ensure financial security for their daughters with a tax-benefit savings approach.
Gold has always been a reliable investment option due to its stability and inflation-hedging nature. It can be invested in various forms like physical gold, Gold ETFs (Exchange Traded Funds), Sovereign Gold Bonds (SGBs), and digital gold.
Physical vs. Digital: While physical gold is traditional, digital gold options like ETFs are gaining popularity due to storage convenience and higher liquidity.
Benefits: Gold is a low-risk asset with the potential for good returns, especially during economic volatility.
Liquidity: Digital gold can be easily sold on the stock exchange, providing a reliable source of funds for future needs.
Investing in gold is beneficial for long-term planning, especially during inflation, and can be used for significant expenses like higher education or marriage.
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Equity mutual funds are ideal for parents who can tolerate some risk in exchange for high growth potential. These funds invest primarily in stocks and have been shown to provide substantial returns over time.
Investment options: You can choose lump-sum payments or opt for a Systematic Investment Plan (SIP), where a fixed amount is invested monthly.
Specialised funds: Some mutual funds are designed for children, blending equity and debt based on risk appetite.
Expected returns: Equity funds have historically generated annual returns of 12% to 15%, making them a great choice for building long-term wealth.
Equity mutual funds stand out as the best investment plan for child, especially when invested over a 10–15-year horizon.
Recurring Deposits are popular among parents looking for a low-risk, systematic savings option for their child's future.
Monthly contributions: You can start with as low as Rs. 1000, making it accessible for most parents.
Expected returns: An RD can yield approximately Rs. 2 lakh with consistent monthly investments over ten years.
Safety: RDs are offered by both banks and post offices, providing a secure way to grow savings.
An RD offers a disciplined approach to accumulating a fund for your child, making it a low-risk option among children investment plans.
PPF is a highly secure, government-backed investment option suitable for long-term goals, with a 15-year lock-in period.
Investment range: You can invest up to Rs. 1.5 lakh per year.
Interest rate: Currently at 8.75%, PPF is one of the best child investment plans for conservative investors.
Tax benefits: Investments in PPF qualify for tax deductions, and the returns are also tax-free.
The PPF account can be opened in the name of a minor and serves as an excellent choice for building a substantial corpus over time.
The NSC is another government-backed option that is ideal for building funds for your child’s education or other future needs.
Investment term: The funds are locked for five years, after which they can be reinvested.
Minimum deposit: You can start with as little as Rs. 100.
Tax benefits: Investments in NSC are eligible for deductions under Section 80C.
This low-risk, tax-saving investment is a good option for parents who prefer secure, short-term investment plans.
Bank FDs and RDs are safe, straightforward ways to invest for your child’s future.
Safety: These deposits are not affected by market volatility, making them a stable investment.
Interest rates: While interest rates may be slightly lower, they offer reliable returns without risk.
Insurance coverage: Many banks offer FD schemes specifically for minors, some with insurance coverage.
FDs and RDs are perfect for conservative investors who want to grow their savings without exposure to market risks.
Insurance plans for children provide both life cover and investment benefits, and this is the child plan investment that is chosen the most across the country.
Policy features: Regular premium payments build a fund over time, which matures as a lump sum to cover major expenses.
Tax benefits: Premiums paid qualify for tax deductions, while maturity and death benefits are tax-free up to specific limits.
Purpose: These plans are designed to cover significant expenses such as education and marriage.
Child insurance policies offer both protection and savings, making them a versatile option for financial planning.
Mutual funds offer the flexibility of equity and debt combinations based on risk preference.
SIP or lump-sum: SIP is a disciplined approach, while lump-sum investment suits those with a higher risk appetite.
Hybrid options: Some mutual funds designed for children combine equity and debt for balanced growth.
Mutual funds are a good option for wealth creation with flexibility and customisation for various investment goals.
ULIPs combine insurance and investment, appealing to parents looking for a low-risk growth strategy.
Returns: Expected returns range between 4% to 6%.
Purpose: Supports long-term goals like higher education and marriage.
Benefits: ULIPs also provide life coverage, and if the policyholder passes away, the child receives a sum or regular payments.
ULIPs serve as a conservative investment for parents wanting life coverage and stable growth potential.
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The earlier you start, the more you can benefit from compounding returns. Starting investments when your child is young provides a longer time horizon, enabling a larger corpus to grow. It’s also essential to ensure your own financial stability before allocating funds for your child’s future. Once your goals—such as education or marriage expenses are clear, create a focused savings plan to achieve them effectively.
Choosing the best child investment plan is a crucial step in securing your child’s future. Each of the best investment plans for a child’s future discussed above offers unique benefits, so carefully assess each option's pros and cons. For guidance, consult OkBima now to select the best investment option suited to your child’s financial needs.
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