Child Investment Plan: Where should you invest for your child's future? Get full details on 8 schemes, including PPF, SIP, and SSY..
Every parent wants to ensure there is no shortage of funds when the time comes for their child's higher education, studies abroad, or marriage. However, given the pace of inflation, mere saving is not enough.
An education cost of ₹10 lakh today could rise to ₹25–30 lakh in 15–20 years. That is why experts advise starting investments early. Yet, the sheer number of options often leaves people confused.
Is PPF better?
Is NPS Vatsalya a good long-term option?
Is Sukanya Samriddhi the best choice for a daughter?
Let’s understand these one by one.
Which is the best investment scheme for a child?
If you seek guaranteed and safe investments, PPF and Sukanya Samriddhi are excellent choices. On the other hand, Equity Mutual Fund SIPs and ELSS are considered better for higher returns and wealth creation over the long term. The right choice depends on your goals, risk appetite, and investment horizon. Let’s look at 8 investment schemes for your children.
1- If safety is your goal, PPF is the strongest option
The Public Provident Fund (PPF) has long been a favorite among Indian families.
Benefits
Government-backed scheme
EEE tax benefit under the old tax regime
Benefits on interest and maturity under the new tax regime
Negligible risk
Benefit of compounding
Who is it for?
Parents who prefer low risk
Goals with a tenure of 15 years or more
2- If you have a daughter, Sukanya Samriddhi is hard to overlook
If you have a daughter, the Sukanya Samriddhi Yojana is considered one of the most attractive options.
Why?
Higher interest rate than PPF
EEE benefit under the old tax regime
Benefits on interest and maturity under the new tax regime
Government-backed security
Who is it for? Daughter's education
Marriage fund
3- NSC (National Savings Certificate): Suitable for the short term
Whenever safe investments are discussed, most people mention PPF or Sukanya Samriddhi. However, the National Savings Certificate (NSC) is an option that many parents overlook. NSC is a government-backed small savings scheme offered by the Post Office, where the investment is considered completely safe. It currently offers an annual interest rate of around 7.7%, which is revised periodically by the government.
Key features of NSC
Government-backed, safe investment
5-year lock-in period
Tax benefits under Section 80C (in the old tax regime)
No maximum investment limit
Fixed and predictable returns
When can NSC be useful for children?
Suppose your child is currently 10–12 years old, and you need funds in 4–5 years for school admission, coaching, or other short-to-medium-term goals. In such cases, NSC can be a useful option.
4- Seeking higher returns? Consider SIPs
History shows that equity mutual funds have delivered better returns than traditional schemes over the long term.
For example, if a parent:
Invests ₹10,000 per month via SIP
Earns an average annual return of 15%
Invests for 18 years
...then the corpus could reach around ₹1 crore. Safe investments alone may not be enough to beat inflation; growth-oriented assets may also be necessary. However, this option does not offer tax benefits.
5- ELSS: Both tax savings and growth
ELSS is suitable for those who:
Want to save tax under Section 80C (old tax regime)
Desire equity exposure
Key highlights
Lock-in period of only 3 years
Tax savings + growth
6- You can also consider NPS Vatsalya
Launched by the government, NPS Vatsalya is a long-term, retirement-style investment model designed for children. Benefits
Long-term compounding
Disciplined investing
For whom?
Parents with a 15–20-year investment horizon
7- Invest in Sovereign Gold Bonds
Sovereign Gold Bonds (SGBs) have been a popular way to invest in gold.
Benefits
No need to hold physical gold
Additional interest income
Tax benefits upon maturity
But keep in mind
This is not a primary investment option but rather a tool for diversification.
8- Child ULIP: If you need both insurance and investment
Many parents want insurance protection alongside their investments. In such cases, a Child ULIP can be a suitable option. However, experts often advise keeping investment and insurance separate.
How does a Child ULIP work?
Suppose you pay an annual premium of ₹50,000. In this:
A portion goes towards life cover
The remaining amount is invested in market-linked funds
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.