In India, where dreams are as vast as the country, securing your child’s future is an important responsibility.
With rising education costs, healthcare expenses, and ever-increasing lifestyles, financial planning for your child is no longer an option but a necessity.
This blog post focuses on the best ways to save for children’s financial future in India.
Let’s begin!
Best Ways to Save Money for Child in India
Saving for your child’s future is essential in today’s economy. The costs of education, healthcare, and basic living expenses are steadily increasing.
By planning early, parents can secure their child’s future, ensuring they have access to quality education and opportunities without financial obstacles.
Building a solid financial foundation secures your child’s future and teaches them valuable lessons about money management and responsibility.
Read the six best ways to save money for a child in India. This will help you achieve financial security. However, focus on early savings and diversified investments to achieve these goals.
- Mutual Funds
Mutual funds and systematic investment plans (SIPs) offer a way to invest in a diversified mix of stocks, bonds, and other financial assets, all overseen by experienced fund managers.
SIPs, in particular, allow for regular investments with a fixed amount, making it easier to build wealth over time without requiring a large initial capital outlay. The returns from mutual funds and SIPs typically surpass those of traditional savings accounts.
This makes mutual funds one of the best child investment plans in India. They are suitable for long-term financial goals such as higher education or marriage. Parents should evaluate a combination of equity and debt funds according to their risk tolerance and investment timeline.
- Sovereign Gold Bonds
Sovereign Gold Bonds (SGBs) are government-issued securities that are tied to the market price of gold. They offer an annual interest rate of 2.5% along with the potential appreciation in gold prices, making them an attractive investment for hedging against inflation and currency devaluation.
SGBs have a tenure of eight years, with the option to exit starting from the fifth year. The capital gains from SGBs are tax-exempt if held till maturity, adding to their appeal as a long-term investment option for securing your child’s financial future.
- Public Provident Fund (PPF)
The Public Provident Fund is a popular long-term savings scheme in India, offering safety, tax benefits, and attractive returns.
Contributions to a PPF account are eligible for tax deductions under Section 80C, allowing you to claim up to Rs. 1.5 lakh annually as per the Income Tax Act, and the interest earned is tax-exempt. With a 15-year lock-in period, PPF promotes disciplined savings for major future expenses, such as education or marriage.
Partial withdrawals are allowed from the 7th year, providing flexibility while maintaining a secure investment environment.
- Stocks
Investing directly in stocks offers good returns but comes with more risks. Stocks represent ownership in listed companies, and their value can grow significantly over time.
Parents can consider blue-chip stocks, shares of well-established and large-cap stocks with a history of reliable performance to build an investment portfolio for their children.
Investing in stocks requires a good understanding of the market and long-term financial objectives. Diversifying the portfolio across different sectors can reduce risks while offering the potential for substantial wealth accumulation for your child’s future needs.
- Government Schemes
In addition to the PPF and SGBs, several other government schemes can help parents save for their children’s future.
The Sukanya Samriddhi Yojana (SSY) is a savings scheme specifically for the girl child, offering high interest rates and tax benefits. The National Savings Certificate (NSC) is another secure option with a fixed interest rate and tax-saving benefits under Section 80C.
These schemes are backed by the Government of India and ensure the safety and stability of capital while providing avenues for building a substantial corpus over time.
Conclusion
Securing your child’s financial future in India requires proactive planning and strategic investment. Utilize dedicated savings accounts, mutual funds or SIPs, sovereign gold bonds, PPF, education, and insurance plans, and maintain a disciplined financial strategy.
Start early, stay informed, and commit to securing your child’s future today for a prosperous tomorrow.
