Child Investment Plans in India: An Overview of Best Plans

Securing a child's future is among the most essential responsibilities of a parent. Parents aim to ensure a safe growth environment, the finest opportunities, and financial security for their children. Investing in the best Child Investment Plan is an excellent step towards achieving these goals.

The best investment plans in India are specifically designed to meet their needs. This article provides an overview of India's best savings plans and child future plans to ensure a safe and secure future for your children filled with growth opportunities, highlighting their benefits and impacts in providing a stable future.

Contents

• How to Choose the Best Investment Plan for Child Future in India?
• Best Child Investment Plans in India
  • 1. Unit Linked Insurance Plans (ULIPs)
  • 2. Sukanya Samriddhi Yojana (SSY)
  • 3. Public Provident Fund (PPF)
  • 4. Mutual Funds
  • 5. Other options
• When is the Right Time to Start Saving for Your Children?
• Key Milestones to Consider When Planning for Your Child's Future
• Conclusion
• Frequently Asked Questions (FAQs)

How to Choose the Best Investment Plan for Child Future in India?

The best investment plan for child future in India will offer a proportionate mix of high rewards, security, flexibility, and growth. When choosing a child future plan, you should keep in mind the following points: 

• Ensure that a stable and reputable provider offers the plan or is backed by some government scheme to ensure the security of your investment from future catastrophes.

• Choose from the child plans that offer long-term capital returns and have already performed well in the market.

• Look for flexibility in premium deposits and withdrawals and potential tax exemption benefits to cope with potential financial crises in future.

• Choose a plan from the best child education plans, as education is the most crucial aspect of a child’s future.

Look for a Child Investment Plan that offers low fees, higher returns and an additional layer of security with an insurance option.

Best Child Investment Plans in India

Investing in the future of your child is a significant responsibility. Therefore, it is essential to make informed decisions when selecting the best Child Investment Plan in India. Here are some of the top options.

1. Unit Linked Insurance Plans (ULIPs)

Unit-linked insurance Plans (ULIPs) offer investment and insurance benefits that combine Life Insurance with market-linked returns. These plans offer flexible fund allocation, enabling investment options in various assets depending on the investor’s risk appetite. ULIPs are among the best child plans for parents seeking long-term financial security for their children's education or other future needs. Additionally, ULIPs offer additional tax benefits for the parents, enhancing their appeal as a saving scheme for boy child or girl child. 

ULIPs offer protection and high growth potential with their periodic premium payments. Moreover, these plans have expected returns between 4% and 6% annually, making them an excellent child savings plan and investment avenue. In the policyholder’s absence, the beneficiary child receives a lump sum or regular premium payments, ensuring the child’s financial stability.

2. Sukanya Samriddhi Yojana (SSY)

Choosing the best policy for girl child can help cover her major life events such as higher education and marriage. The Sukanya Samriddhi Yojana (SSY) is a specialised child investment plan exclusively designed to improve the financial well-being of female children in India. Launched by the Government of India, this scheme offers a secure and long-term investment avenue for parents to save for their daughter's future.

• Parents can open an SSY account for their girl child either at the time of her birth or before she reaches ten years of age. It can be opened at any post office or authorised commercial bank nationwide, making it easily accessible for parents.

•  The Sukanya Samriddhi Yojana has a tenure of twenty-one years or the time of the female child’s marriage, whichever event is earlier. Once the female child becomes an adult (eighteen years and above), she becomes eligible to operate the account independently, empowering her with financial autonomy and decision-making.

• One of the key features of the Sukanya Samriddhi Yojana (SSY) is its government-declared quarterly interest rate, calculated on a compounded basis for steady growth. This makes it one of the best government schemes for girl children, offering stable returns for long-term goals. By investing in the SSY, parents can ensure financial security for their girl child, confidently supporting her higher education, career aspirations, or other life goals.

3. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a government-backed savings scheme and one of the best investment plan for child future in India. With a 15-year lock-in period, PPF encourages disciplined savings while offering a higher interest rate than fixed deposits. The accumulated fund at maturity can support significant expenses such as a child’s education or marriage. Additionally, PPF provides tax benefits under Section 80C, making it a reliable long-term option for Child Investment Plans.

Check out: PPF Calculator

4. Mutual Funds

They offer various options, such as equity, debt, and hybrid funds. Investing in mutual funds can provide higher returns over the long term, making them an ideal choice for Child Investment Plans. However, it is essential to consider the risk profile and investment horizon before investing in Mutual Funds.

5. Other options

In addition to these aforementioned child investment options, parents must consider other investment avenues to diversify Child Investment Plans. You can consider the following options when looking to diversify your child's investment portfolio:

• Long-term Fixed Deposit: Fixed deposits are the best one-time investment plan for child's future, allowing higher returns and security for long-term returns.

• Recurring Deposits: Recurring deposits offer more flexible investment options, allowing parents to invest capital at regular intervals instead of a lum-sum amount while earning fixed interest rates over the plan’s tenure.

• Gold Investment: Gold is the most secure Child Investment Plan. Gold is a physical investment option which has seen regular and high returns over the years. In the ever-rising inflation period, gold is the best investment plan to ensure high returns on investment.

When is the Right Time to Start Saving for Your Children?

Here are some key considerations to help you determine the right time to start.

• Early start: The power of compounding works in your favour when you have a longer investment horizon. Starting early gives your investments more time to grow, potentially resulting in a larger corpus.

• Birth or early childhood: Many parents start saving for their children soon after their birth or early childhood. This allows for a longer investment horizon and helps build a substantial corpus when your child reaches adulthood.

• Stable financial situation: It is important to assess your financial stability before committing to saving for your children. Ensure that you have a solid emergency fund, are managing your finances well, and can comfortably allocate a portion of your income towards your children's savings.

• Goal-based savings: Identify specific goals for your children, such as funding their education, supporting their career aspirations, etc. Once you know these goals, you can create a savings plan and invest accordingly.

• Education planning: Education is a significant expense, and it is wise to start saving for your child's education well in advance. Research the expected costs of higher education and factor in inflation to determine the amount you need to save each month and invest in the best plan for child education accordingly.

Key Milestones to Consider When Planning for Your Child's Future

When saving for your children's future, it is important to identify key milestones and plan your finances accordingly. By understanding and preparing for these milestones, you can ensure that you have the necessary funds when the time comes. Here are some key milestones to consider when choosing the best policy for children and their future.

• Education expenses: One of the most significant milestones is funding your child's education. From primary school to higher education, education costs continue to rise. Start saving early to accumulate the necessary funds.

• Skill development and extracurricular activities: As your child grows, they may develop interests in various extracurricular activities or pursue skill development courses. These activities can contribute to their growth and help them excel in their chosen fields. Plan for the associated expenses, including classes, equipment, and coaching fees.

• College and university: Another crucial milestone is funding your child's college or university education. This may include tuition fees, accommodation, transportation, and other living expenses. Determine the potential costs and start saving early to ensure you can provide the necessary financial support.

• Career development: As your child enters adulthood, they may require financial assistance for career-related expenses. This could include costs associated with internships, professional courses, certifications, or setting up a business. Prepare for these expenses by setting aside funds or exploring investment options that can support your child's career development.

• Marriage: A marriage is a significant event in many cultures and involves substantial expenses. While it may seem far off, planning for your child's wedding can help alleviate financial stress when the time comes. Consider the costs of ceremonies, venues, outfits, and other related expenses. 

• Emergency fund: An emergency fund is vital for handling unexpected medical emergencies or job loss. It ensures that your child’s best investment plan or child future plans remain secure, even during financial setbacks.

Conclusion

All of the top investing strategies for children's futures mentioned above have the potential to produce wealth and cover all of the costs associated with raising children. Thus, carefully weigh the advantages and disadvantages of each choice. Before making a decision, it is always important to consult financial specialists.

Frequently Asked Questions (FAQs)

Here are some FAQs about Child Investment Plans

What are the key factors to consider when choosing a Child Investment Plan?

When selecting a Child Investment Plan, it is crucial to consider factors such as the investment horizon, risk tolerance, returns, tax benefits, and flexibility. Additionally, it is essential to evaluate the reputation and track record of the insurance company or fund house offering the plan.

Can I change the investment strategy in a Child Investment Plan?

Yes, many Child Investment Plans offer flexibility in terms of investment strategy. 

Can I withdraw funds from a Child Investment Plan before maturity?

Child Investment Plans usually have a lock-in period, during which premature withdrawals are not allowed. However, some plans offer partial withdrawal options in case of emergencies. It is essential to understand the terms and conditions of the plan before making any withdrawals.

How much should I invest in a Child Investment Plan?

The investment amount in a Child Investment Plan depends on various factors such as your financial goals, risk appetite, and investment horizon. 

Can I take a loan against a Child Investment Plan?

Some Child Investment Plans might offer the option to avail loans against the policy's surrender value.

Which is the best investment plan?

India offers diverse investment options for different goals and risk levels. PPF offers long-term, risk-free savings with tax benefits, while NPS focuses on retirement with market-linked growth. FDs provide guaranteed returns, whereas Mutual Funds and Equity Investments offer higher, market-linked returns. Gold Bonds are a secure way to invest in gold with added interest benefits.

What can be the best investment plan for 3 years?

For a 3-year investment plan, options like Fixed Deposits (FDs) and Recurring Deposits (RDs) offer safe, guaranteed returns. Short-Term Debt Mutual Funds provide moderate returns with low risk, while Liquid Funds offer high liquidity and better returns than savings accounts. Post Office Time Deposits are another secure choice with fixed interest rates.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.

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