6 Investment Options to Secure the Child’s Future

How Important is it to Invest for the Future of the Child?

Parenting might sound like an easy task; however, it is not so. As the child grows, the responsibilities grow as well. To fulfil these responsibilities investing in any of the child future plans will help the apple of your eyes achieve any important milestone of life. 

The right kind of investment plan can support your child at every crucial stage of life. Also, the need for a child future plan arises from the sheer fact of life's uncertainty.  Even if you are not around tomorrow, the child will not have to face any financial implications. 

In this article, let us discuss certain options that will help you to make an informed and wise decision for the child:

Investment Option to Secure the Future of a Child

Here is a rundown of the investment options that would help to secure the future of a child:

1. Fixed Deposits

   Fixed Deposits are one of the most easily accessible savings instruments. The safest form of investment without any major risk involved. The fixed deposit is going to get you fixed returns based on your monthly deposit amount, tenure, and interest rate. You can open and operate a fixed deposit account for the minor child at any public or private bank. As per the last updates from the Government of India, the interest rate on the fixed deposit account ranges from 5.75%-6.75%.

2. Government Schemes

   The government of India has been introducing various short and long-term government schemes from time to time. The schemes are unbiased of class, race, income, etc. From comprehensive plans, securing the girl child future to flexible plans supporting average income earners, you can pick from the best of government plans on the varying needs and objectives. Let us have a look at some of the following schemes:

   • Post Office Savings Account

     The post office savings account is the most preferable savings scheme in India. It is considered one of the most secure forms of investment. The reason is, in case of urgent need, the account offers partial or full liquidation of funds at very short notice. You can open a post office savings account on behalf of your child provided they are below the age of 10 years. Also, minors above the age of 10 years can easily open and operate the account in their name. The minimum opening amount is Rs 500 and there is no maximum limit on deposits. At present, the post office savings account interest rate is 4.00% p.a. 

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   • Public Provident Fund

     PPF is an investment scheme launched to promote small savings. The PPF account comes with a lock-in period of 15 years and guaranteed returns. It works like a long-term savings plan which can be used by the beneficiary in the future. You can open a PPF account on behalf of your child. The minimum balance required to maintain the PPF account is Rs 500 and the maximum deposit limit is Rs 1.5 lakh each year. The current interest rate on the PPF account is 7.1%.

   • Sukanya Samriddhi Yojana

     Sukanya Samriddhi Yojana is an investment scheme launched by the government of India in 2015. It is designed to help parents financially secure their girl child's future. You can open an SSY account for your girl child at any India Post Office branch provided she must be below the age of 10 years. The maximum tenure of the SSY account is 21 years. However, upon her needful wish, the girl can withdraw the money and close the account after she turns 18. The current interest rate on the SSY account is 7.6% p.a. 

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3. ULIP 

   Consider it like a combo meal you get at your favourite restaurant. ULIP refers to Unit Linked Investment Plan. In simple words, it offers the dual benefit of life insurance and investment. Just like your food bill gets divided into the main course and dessert.  In the case of the ULIP plan, a portion of your premium is used in the life insurance and the remaining is invested in the market funds. This child future plan would be a wise idea worth investing

4. Life Insurance 

   Believe it or not, the life insurance plan is a win-win game for the policyholder. When you are the only breadwinner for the family the life insurance plan becomes a necessity. A life insurance plan provides the beneficiary with the death benefit in case of the policy holder's untimely demise. Also, it provides the beneficiary with the maturity benefit at the end of the policy tenure. To secure your child's future, you can think of a life insurance plan because it can work as a long-term investment.

5. Traditional Endowment Plan

   Remember the combo meal? No, well the Endowment plan is not exactly like that.  However, it doesn't come with the risk. Let's understand in simple words, under the endowment plans, a portion of your premium will be used for the insured's life coverage and the remaining will be used as savings. There is no involvement of your money in the market investments. The savings are fixed and thus risk-free. In case you are looking for the safest investment plan to secure your child's future, this could be the one.

6. Mutual Fund/SIP

   Systematic Investment Plans or Mutual Funds are subject to market risks, therefore read all scheme related documents carefully.  These two are popular investment options in the market. These are for those who wish to reap benefits that are greater in comparison with the overall investment amount. One can get the best out of Mutual funds/SIPs by investing a considerably large amount at once. However, to start SIPs, one can begin to invest with a minimum of Rs 500. This investment option is best suitable for those who are either short on time or money. It is ideal for those who want to multiply a certain amount within a specific tenure. Indeed, this is possible with the right approach and market understanding. 

Wrapping It Up

Invest in the right child future and remain stress-free in regards to the financial future of your joy.  It is about the better tomorrow of your child, therefore, conduct thorough research. Suit the option that fulfils the needs and suits your pocket. Whenever you plan to invest for the child's future, always remember to consider the inflation effect.  It is highly recommended to start investing early for a bright tomorrow.