Children’s Day 2024: Best Investment Options to Secure Your Child’s Future – PPF, Bank FD, MF, SIP, NPS and more

Children’s Day 2024 celebrates the innocence and potential of every child. For parents, the occasion can be an opportunity to reconsider their future plans for their children. Proper planning requires well-calibrated and smart investments in options like mutual funds, fixed deposits and other schemes.

Several government schemes have been launched for parents who want to invest in their children’s future. For example, Sukanya Samridhi Yojana, NPS Vatsalya, etc. As we celebrate Children’s Day 2024, learn about the best investment options to secure the financial future of children.

Children’s Day 2024: the best children’s investment options

The most popular investment plans for children include PPF for minors, Fixed Deposit schemes, Mutual Funds, Gold Bonds, Gold ETFs, etc.

These are the best child investment options

PPF for minors

A Public Provident Fund (PPF) for minors can be a good way to create a long-term savings corpus for the minor’s future needs. However, to reap the benefits, it is important to invest consistently in the PPF.

The key features of a minor fund PPF account include a lock-in period of 15 years, tax benefits, compounding, etc. The minor fund PPF can be debited from the account only if that amount goes to the benefit of the minor. Moreover, there are no restrictions on either parent’s contribution to their child’s PPF.

Fixed deposits from banks

Adults can open an FD for their children by naming themselves or their partner as guardians. A few banks also have their own FD schemes aimed at children, and some of these schemes also offer returns at a higher interest rate. PNB Balika Shiksha Scheme, PNB Uttam Non-Callable Term Deposit Scheme, Yes Bank Fixed Deposit for Child and SBI FD for Child are some examples of child-specific FD schemes launched by Indian banks.

NPS Vatsalya

The Indian government recently launched the National Pension Scheme Vatsalya (NPS Vatsalya), a pension scheme for Indian minors. NPS Vatsalya is a premium scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The arrangement can be a contribution from parents to their child’s retirement planning. Parents can invest a minimum of Rs 1,000 per month, with no upper limit. The scheme offers long-term market-linked investments.

Gold ETFs

Gold Exchange-Traded Funds (ETFs) can provide higher returns than low-risk investment vehicles such as FDs and bank accounts, and that too at a lower risk compared to the stock market. Gold ETFs will allow investors to invest in gold and make profits from its price appreciation.

Child-specific recurring deposit plans

Like FDs, many banks offer child-specific Recurring Deposit plans, which can offer benefits such as smaller investment amounts and relatively higher interest rates. A KB account ensures the investment of a fixed amount of money every month for a fixed term. People can also get a fixed interest rate on their savings.

Investment funds

People with a higher risk appetite can include mutual fund investments in their children’s savings plans. Unlike stocks, mutual funds are a safer option for investing in the stock markets, with lower equity risks and higher returns than conventional investment vehicles.

Sukanya Samridhi Yojana

The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme that parents can use for their girls. The scheme offers tax benefits on principal, interest and even monthly installments and offers an attractive interest rate. Anyone can open an SSY account for their girl child and start investing with a minimum amount of ₹5 ₹250. The account must be opened before the girl child turns 10 years of age.