Where to invest for child education - PPF, Sukanya Samriddhi Yojana, equity mutual funds

If you want to save for your child’s education and are looking for the best option, here are a few you can pick from.

Best investment tools for Children

Planning for your child’s future can seem quite effortless, but executing the same is a tough job. This is made tougher given the dynamic scenario of the national and international economy. The standard of living expenses continues to rise, even if our cash flow rises only marginally. In such a situation, saving funds for child education must be your top priority. The expenses of higher education are rising at an alarming rate every year. But if you are an early planner, you can save a handsome amount for the same. 

The first step is to find out what your child may be interested in, academically or vocationally. For instance, the cost and timing of expenses to nurture a mechanical engineer would differ from that of an Olympic javelin thrower. Accordingly, plan out a rough sketch of the cost of the courses that your child may enrol in. Thereafter make a correlative estimate of the course and start your investment. 

Now you may be puzzled thinking about where to invest for child education as you will have numerous child education policy options to choose from. This article will give you an overview of some of the investment tools to aid your child education plan in India.

Also Read: A Girl's Guide To Funding Her Higher Education

1. Public Provident Fund (PPF)

It is a 15-year plan and can be started even in a minor’s name. You can invest up to 1.5 lakh per year in a child PPF account along with your PPF account. It has a government guarantee and is tax-free. You get optimum tax benefit on the PPF, thus making it a popular investment. The interest rate on PPF is presently 7.1% per annum.

2. Sukanya Samriddhi Yojana (SSY)

This child plan is specially designed for the girl child. You need to start this plan before your child attains the age of 10. Once she is 21, the plan matures. SSY is also a 15-year plan, and the investments get tax benefits under section 80C. Interest earned, too, is tax-free. The interest rate on Sukanya Samriddhi Yojana is presently 7.6% per annum.

Related: Sukanya Samriddhi Vs. PPF: How To Choose The Right Investment Option For Your Girl Child?

3. Equity mutual funds

Experts suggest that to fight high inflation, it is a better idea to get familiar with equity mutual funds. Select the schemes wisely as per your child education plan and start SIPs in them until your child starts their higher education. Presently, some of the top equity mutual funds have generated a return of over 50% in the last year. Actual return varies depending on the underlying portfolio's performance.  

4. Children's mutual fund scheme

A mutual fund for child has terms and conditions uniquely designed to match child-related goals such as funding the cost of higher education and any other expenses related to them. But they generally have a lock-in period of 5 years or till the child becomes an adult. Presently, most children mutual funds are showing a year's return of 10-15%.

Related: How To Financially Plan For Your Child's Education?

5. Child insurance plans

Such plans aim for two objectives - one is to finance your child’s higher education and secondly, it gives financial protection to your child in case of your untimely death. Child insurance plans have the same tax benefits as other insurance plans. The typical return is 11-14%.  

With our emerging economy and expected long-term inflation, your child’s education may end up costing you quite a fortune. To beat it, choose the best child education plan and secure their future.

Planning for your child’s future can seem quite effortless, but executing the same is a tough job. This is made tougher given the dynamic scenario of the national and international economy. The standard of living expenses continues to rise, even if our cash flow rises only marginally. In such a situation, saving funds for child education must be your top priority. The expenses of higher education are rising at an alarming rate every year. But if you are an early planner, you can save a handsome amount for the same. 

The first step is to find out what your child may be interested in, academically or vocationally. For instance, the cost and timing of expenses to nurture a mechanical engineer would differ from that of an Olympic javelin thrower. Accordingly, plan out a rough sketch of the cost of the courses that your child may enrol in. Thereafter make a correlative estimate of the course and start your investment. 

Now you may be puzzled thinking about where to invest for child education as you will have numerous child education policy options to choose from. This article will give you an overview of some of the investment tools to aid your child education plan in India.

Also Read: A Girl's Guide To Funding Her Higher Education

1. Public Provident Fund (PPF)

It is a 15-year plan and can be started even in a minor’s name. You can invest up to 1.5 lakh per year in a child PPF account along with your PPF account. It has a government guarantee and is tax-free. You get optimum tax benefit on the PPF, thus making it a popular investment. The interest rate on PPF is presently 7.1% per annum.

2. Sukanya Samriddhi Yojana (SSY)

This child plan is specially designed for the girl child. You need to start this plan before your child attains the age of 10. Once she is 21, the plan matures. SSY is also a 15-year plan, and the investments get tax benefits under section 80C. Interest earned, too, is tax-free. The interest rate on Sukanya Samriddhi Yojana is presently 7.6% per annum.

Related: Sukanya Samriddhi Vs. PPF: How To Choose The Right Investment Option For Your Girl Child?

3. Equity mutual funds

Experts suggest that to fight high inflation, it is a better idea to get familiar with equity mutual funds. Select the schemes wisely as per your child education plan and start SIPs in them until your child starts their higher education. Presently, some of the top equity mutual funds have generated a return of over 50% in the last year. Actual return varies depending on the underlying portfolio's performance.  

4. Children's mutual fund scheme

A mutual fund for child has terms and conditions uniquely designed to match child-related goals such as funding the cost of higher education and any other expenses related to them. But they generally have a lock-in period of 5 years or till the child becomes an adult. Presently, most children mutual funds are showing a year's return of 10-15%.

Related: How To Financially Plan For Your Child's Education?

5. Child insurance plans

Such plans aim for two objectives - one is to finance your child’s higher education and secondly, it gives financial protection to your child in case of your untimely death. Child insurance plans have the same tax benefits as other insurance plans. The typical return is 11-14%.  

With our emerging economy and expected long-term inflation, your child’s education may end up costing you quite a fortune. To beat it, choose the best child education plan and secure their future.

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