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23-09-2022 |
Parenting your children is an important responsibility. You must ensure best practices to show the right path to growth and development at different stages in your children's life. In addition, it is equally important to do the necessary financial planning to help them accomplish all their money goals. The obligation becomes even more crucial if you have a girl child. The Indian tradition has evolved a culture for the future of girl children. And to fulfil them, investing in the right options for the necessary financial support becomes vital. Here are the top 5 child investment plans in India.
Top 5 Investment Schemes for Girl Child
Investment schemes for girl children should fulfil their financial obligations at different stages in their life.
- Sukanya Samriddhi Yojana(SSY)
The scheme has been introduced by the government to benefit girl children in India. The account must be opened in the name of the girl child. The minimum and maximum annual investments can range between ₹250 and ₹1,50,000. The payment can be made by the parents annually.
The interest rate is between 7% and 8% and is compounded annually. The policy matures when the girl child is married after age of 18 years or attains 21 years of age (whichever is early). One family can invest in up to 2 SSY accounts while saving on tax*. The interest rate is subject to change; hence, checking and verifying it before opening the account and investing in it through the policy term is important.
- Children Gift Mutual Fund
It is a type of mutual fund targeted toward achieving the different life events of a child, such as marriage, higher education, etc., The mutual fund scheme is further classified into debt-oriented and equity-oriented hybrid mutual funds. If you opt for the hybrid equity mutual fund, the exposure to equity investment is more than 60%, and if you opt for the hybrid debt mutual fund, the exposure to the debt fund is more than 60%.
The parents or guardians can invest in such mutual fund schemes in the name of the minor child. Before you decide on the type of investment plan for your girl child, analyse your financial objectives, the extent of risk you can afford, the cost of the product, lock-in period, rate of return and the steady flow of your income.
- Unit Linked Insurance Plan
A child insurance policy is another savings option that can help secure their life and accomplish their financial objectives timely in the future. Comprehensive life insurance plans such as the ULIP plan can provide life cover and market-linked returns on maturity. Therefore, the insurer will utilise the premium for ULIP policies to provide life coverage and help you invest in financial securities to increase wealth creation opportunities.
You can purchase the ULIP policy for your girl child and save in it according to your risk appetite. For example, the insurance providers offer equity, debt and balanced fund options. And while investing in child plans such as the ULIP policy, you can also switch between the fund options during an economic downturn.
Tata AIA Life Insurance Plans provide 11 fund choices and the option to analyse, purchase and maintain them online. With the help of our expert fund managers, you can switch to a more stable fund option and secure your invested amount, considering the market volatility.
- National Savings Certificate(NSC)
It is a government-sponsored financial investment initiative that can be opened in the name of a minor child. The interest rate is 6.8% per annum and is subject to change. The minimum investment amount is ₹1000 and has a lock-in period of 5 years. It is a safe investment option for conservative investors. The investment made in NSC qualifies for a tax* deduction upto ₹1,50,000 under Section 80C of the Income Tax Act, 1961.
- Post Office Term Deposit
The India Post Department offers a range of savings schemes for the people of India to satisfy financial goals in their life. The post office term deposit can be considered an investment for a girl child to save funds and accomplish various money goals such as higher education, marriage, etc., The account can be opened by the parent or the guardian in the name of a minor child. The maturity period ranges between 1 and 5 years.
For a 5-year term deposit scheme, the investment will qualify for a tax* deduction under Section 80C of the Income Tax Act, 1961. The accumulated fund and the interest earned will be the maturity benefit. The minimum investment for the post office term deposit is ₹1000, and the interest rate can be between 5.5% and 7%. It is one of the valuable investment schemes for a girl child considering the benefits if the investment is made consistently over the entire policy tenure.
Conclusion
Financial investments for children are the means to secure their future. It will help them lead a peaceful life and also accomplish their goals in the long term. Considering the traditional culture of raising a girl child, financial institutions in India offer a range of products to save a fund for their future.
However, it is important to evaluate your financial requirement, affordable investment and risk appetite and the policy term for the investment to choose the right product for your girl child's future well-being. And once you have chosen and purchased a product, stay invested in ensuring the benefits!
L&C/Advt/2022/Sep/2243
