Best Children Saving Plans to Secure Your Child’s Financial Future

Heana Sharma

A Child Savings Plan is a savings plan that allows you to invest funds to meet the future financial obligations of your child, like higher education, marriage, or any other specified expenses. A child savings plan allows you to build corpus funds to meet your child’s future financial requirements along with insurance coverage. 

A Child savings plan offers dual benefits of insurance & investment, where your child will receive the amount deposited in the corpus in case of your sudden demise in a lump sum. Along with this, it also builds a corpus fund to meet the different milestones of your child. 

Things to be considered while choosing a Child Saving Plan

Provided below are the things to be considered while choosing a Child Saving Plan:

Underst& the main objective of your savings, i.e., whether the intended use is for a child’s education, security, marriage, or some other purpose.

Consider the time when the end usage of funds is desired, i.e. whether the amount can be saved for a longer or shorter time span.

Consider the flexibility factor in terms of amount, frequency, & tenure of the plan, which means if there is any flexibility in terms of change in amount, tenure, etc.   

Consider the returns of the plan by looking into its past performances, which can give a rough idea of the plan.

Look into the tax benefits that can be availed on the amount of investment & returns while deciding on a plan.

Consider the withdrawal of money time span in case of an emergency situation.

Finalise a savings plan provider after conducting proper research, as a reputed provider is considered to be the safest one.

While investing the amount in the child savings plan, take into consideration the inflation factor as well.

Some of the plans come with automatic features such as an increase in balance to be in alignment with the inflation factor.

Consult a financial advisor to get customised advice depending on the financial objective.

Some of the Best Investment Options for your Child

Mentioned are some of the best investment options that can be considered for children:

SIP is one of the kinds of mutual fund investments which allows one to invest a certain amount of money for a specified period in mutual funds. SIPs can be used to invest in debt, equity, or hybrid funds depending on the requirements & help create savings for children’s future.

The government of India created this scheme to consider the future of a girl child & offer lesser risk. Parents can get an account opened till the girls attain the age of 10 years, & the plan matures at the age of 21 years. The minimum deposit amount is INR 250, & the maximum deposit amount is INR 1,50,000 annually.

Debt funds are fixed-income investment plans like bonds that are considered to be low-level risk investments providing guaranteed returns. One can invest in any of the 16 types of debt funds depending on their requirements & preferred investments.

It is a Savings Plan backed by the government that entitles you to tax benefits under 80C of the Income-tax Act. It is a long-term investment plan with a maturity period of almost 15 years & an interest rate of 7.1%. It allows you to withdraw money once the period of 5 years is completed. 

Anyone above 18 years old can open a PPF account with a minimum amount of INR 500 & a maximum of INR 1,50,000 per annum.

To secure children’s futures, the most liquid form of investment is gold, which offers high returns & protects against inflation. Gold can be bought in multiple forms, such as bars, coins, or jewellery, or also invested in Gold exchange-traded funds or gold bonds. 

This savings scheme can be opened by any adult or minor above 10 years of age at the post office with a maturity period of up to 5 years.

The unit-linked insurance plans for children come with both insurance & investment factors, hence offering financial security & saving their future. It contains both equity & debt, where equity depicts high returns & more risk. & on the other h&, debt depicts lesser risk & lower returns. 

They are like savings accounts, where you can deposit a fixed amount every month for a specified period of time. This amount will reap interest, which will be compounded over time. This deposit comes with guaranteed returns & low risk, which help to secure children’s future.

Benefits of a Child Saving Plan

Provided are the benefits of a child savings plan:

By helping to accumulate a corpus of funds, it offers financial security.

It offers long-term savings, which range from 10 to 25 years, & helps to meet children’s future obligations.

Some plans provide guaranteed returns, protecting the investments from a volatile market.

Get life insurance coverage that helps you meet your financial obligations in case of sudden demise.

It helps to plan savings in a disciplined manner, helping you make a habit of setting aside the funds every month.

It offers tax benefits such as exemptions on principal amount, maturity amount, & partial withdrawals.

Conclusion

The appropriate time to start with a child plan is now, i.e., the sooner, the better. The longer the tenure is, the better the returns are, & also, the sooner you plan, the lower the burden is on your pocket. One should be regular in his savings as it will help accumulate funds to fulfil the financial obligations towards children. 

Hence, with the help of considerate planning, one can meet the financial obligations related to their children’s milestones, hence providing them with a brighter & more secure financial future.

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