Money Matters: 7 Investment Options for Your Child, From PPF to Mutual Funds

As parents, securing your children's future is a top priority, and wise investments play a crucial role in achieving this goal. From traditional savings schemes to modern investment avenues, India offers a diverse range of options to help build a solid financial foundation for your child. As per the Financial Express, let's delve into the top seven investment choices for your child's future.

7 Investment Options For Your Child

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a long-term savings and investment scheme initiated by the Ministry of Finance. It offers reasonable returns and income tax benefits. PPF accounts can be opened for minors, with a minimum deposit of ₹500 and a maximum of ₹1.5 lakh per financial year. As per the Financial Express, the current interest rate stands at 7.1% per annum, compounded annually.

Sukanya Samriddhi Yojana (SSY)

Introduced as part of the Beti Bachao Beti Padhao campaign, the Sukanya Samriddhi Yojana (SSY) is a savings initiative tailored for female children. Parents can open accounts with a minimum monthly deposit of ₹250 and a maximum annual deposit of ₹1.5 lakh. The current interest rate is 8% per annum, compounded annually, and the account tenure is a minimum of 21 years or until the child reaches 18 or gets married.

Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plans (ULIPs) combine insurance coverage and investment opportunities. As per the Financial Express, ULIPs offer a long-term investment horizon, flexibility in fund selection and premium payment, and tax benefits under Section 80C of the Income Tax Act, making them an attractive option for parents saving for their child's future.

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Mutual Funds

Mutual funds allow parents to invest modest amounts each month towards their child's future goals, such as education or marriage. These funds offer a diversified portfolio of securities and tax advantages, enabling parents to witness the growth of their investment over time.

National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a government-backed savings instrument with a fixed interest rate and tax benefits under Section 80C. It provides a sovereign guarantee, fixed interest income, and reinvestment options, making it suitable for risk-averse investors seeking tax-saving avenues.

Gold ETFs

Gold Exchange-Traded Funds (ETFs) track the price of gold, providing investors with exposure to the precious metal without physical ownership. As per the Financial Express, these ETFs offer liquidity, tax efficiency akin to equities, and the ability to diversify and hedge against inflation, making them an attractive option for parents.

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Corporate Fixed Deposits

Corporate Fixed Deposits (FDs) offer higher interest rates than traditional bank FDs, albeit with slightly higher risk. These FDs provide attractive returns, flexibility in tenure, and security backed by the issuing company, making them suitable for investors comfortable with slightly higher risk in pursuit of better returns.

By carefully considering these investment options, parents can make informed decisions and create a solid financial foundation for their child's future aspirations and well-being.

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