Child Investment Plans: Know about 8 Best Long-Term Investment Options for Your Child in India 2022
The best future for children is what their parents want. So they are ready to go to any extreme to make sure their children are safe and successful. However, with rising costs, this amount will only increase in the coming future, making it essential for parents to look at long-term investment options in India for providing quality education to their children.
“All kids need is a little help, a little hope, and somebody who believes in them”
– Magic Johnson (Former American basketball player).
Starting early is the right time to start saving for your children so you can build a good corpus for their college education and marriage. There are many long-term savings options in which you can park the savings, so it is secure and grows manifold over time.
List of 8 Best Child Long-Term Investment Plans in India 2022
Here we listed out the 8 best long-term investment plans for children in India with high returns that you must know to plan for your children’s future needs:
- Child Insurance Plans
- Gold ETF/ Funds
- Fixed Deposits(FD)
- Sukanya Samriddhi Account (SSA)
- Unit Linked Insurance Plan (ULIP)
- Post Office Savings Schemes
- Public Provident Fund (PPF)
- Stocks & Mutual Funds
1. Child Insurance Plans
If you are looking for the best long-term investment plan for a child, then child insurance plans could be your best bet. They are a combination of insurance and investment that ensure a secure future for your child in the event of your untimely demise. These plans invest a portion of the premium to generate above-average returns, which are payable at the time of maturity.
2. Gold ETF/Funds
This could be the most practical investment option for parents with girl children as gold is a valuable asset and a precious gift for her marriage. Rather than buying gold physically, you could invest in gold funds or ETFs that are traded electronically in the stock market. By purchasing gold electronically, it is not necessary to rent lockers or have a fear of theft. When the gold prices are high, you may choose to sell the units of gold ETFs and use the money to buy physical gold.
3. Fixed Deposits (FD)
The traditional model of saving is also one of the best investment plans for the long term especially for people looking at the security of their savings. You can open a fixed deposit account in any bank with a specific amount for a period of long duration, such as 3, 5, or 10 years, at a fixed rate of return ranging between 3% to 6.5% per annum. The capital, along with interest, can be withdrawn at the end of the tenure. While the savings are safe, liquidity is the main drawback as there is no possibility of early withdrawal.
4. Sukanya Samriddhi Account (SSA)
Are you looking for the best investment for the long term for your girl child? Then this investment scheme by the Indian government will allow you to save for your girl child’s life stages such as education, marriage, etc. From a minimum of Rs 1000, one can start investing in an account that pays you an interest rate of 7.6%, which shall mature on her completing 21 years of age.
5. Unit Linked Insurance Plan (ULIP)
These are plans that are best suited for individuals looking for insurance protection and investment returns. ULIPs provide better returns than other traditional forms of investing, which will help beat inflation and save for your child’s future. As one portion of the premium you pay is investing in funds operating in the capital market, the chance of generating good returns is more. In addition to this, your family is eligible for the insurance payout in case of your untimely death, securing the financial condition of your and others in the family. Since these plans participate in equity markets, the returns are higher than other forms of insurance, but one can expect the returns to hover around 8% – 10%.
Also Read: Best Short-Term Investment Options in India
6. Post Office Savings Schemes
It is one of the oldest forms of savings available with post offices across the nation. A wide range of savings schemes is available with the post office, such as the post office savings account, monthly income scheme account, 5-year senior citizen savings scheme, National savings certificate, Kisan Vikas Patra, Sukanya Samriddhi Yojana, etc. With the backing of the government and wide presence, post office savings schemes are favored by many for security and better interest rates. To enquire more on these plans, one may visit the nearest post office to get a clear idea.
7. Public Provident Fund (PPF)
It is similar to the Employee Provident Fund (EPF) offered to the salaried class, but PPF is open to the general public and can be opened by anyone. While PPF investments come with a lock-in of 15 years, the interest rate is higher than a savings or fixed deposit account. In addition to the savings, one other most prominent advantage of investing in the PPF scheme is the tax advantage that one can claim under section 80 C.
8. Stocks & Mutual Funds
Investing in the stock market is risky, but the returns are handsome and beat all other options easily. You may choose to invest in stocks directly or go for the SIP route in mutual funds to create a long-term investment plan for child growth. The systematic investment plan is more like depositing a fixed amount of money in your savings account for a considerable amount of time until it reaches a specific target. In the long run, stocks and investments in mutual funds generate very good returns over a more extended period, ranging from 12% to 16% returns. If the general economy is good, one may expect higher returns of 20% or 30%. Moreover, there are multiple funds to choose from, such as small-cap, mid-cap, large-cap, debt funds, etc.,
To sum up, many long-term investment options are available to save for your children, do your research to find the right mix of investment return and safety since it is your hard-earned money that has to be put to work.