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- 1. Sukanya Samriddhi Yojana Scheme
- 2. National Savings Certificate
- 3. Post-Office Term Deposit
- 4. Post-Office Recurring Deposit
- 5. Unit-Linked Insurance Plan
- 6. CBSE Udaan Scheme
- 7. National Scheme of Incentive for the Girls of Secondary Education
- 8. Balika Samridhi Yojana
- 9. Fixed Deposits (FD)
- 10. Children Gift Mutual Fund
- 11. Mutual Funds via Systematic Investment Plan
- 12. Gold ETFs
- Conclusion
- FAQS - FREQUENTLY ASKED QUESTIONS
Investing in your child's future is a thoughtful and forward-looking endeavour, ensuring financial security and independence as she grows. In India, there are several investment options tailored to help parents and guardians secure their daughter's financial future. These investment choices encompass various risk profiles, time horizons, and financial goals. Here are the top 12 investment options for a girl child in India.
1. Sukanya Samriddhi Yojana Scheme
A savings-scheme that is backed by the government, the Sukanya Samriddhi Yojana (SSY) Scheme comes under the "Beti Bachao, Beti Padhao" campaign to promote welfare of the girl child. The scheme has been designed to encourage you to secure your daughter’s future by opening an account in a post office or a commercial bank.You are eligible for the SSY Scheme if you are a parent or legal guardian of a girl child aged 10 years or younger. With a minimum deposit of Rs. 250, the child’s birth certificate, and your identity proof, you can open an SSY account for your little one. The account matures after a period of 21 years from the date of opening.The Sukanya Samriddhi Yojana currently offers an 8% interest rate, and is beneficial in the following ways:• The Sukanya Samriddhi Yojana comes with the Exempt, Exempt, Exempt (EEE) status under Section 80C of the Income Tax Act, making contributions to this scheme (up to Rs 1.5 lakh/year) eligible for tax deductions.• The sum you receive after maturity is tax-free.• You have the option to withdraw from this account for special needs such as funding higher education.• You can transfer the SSY account from one authorised post office or bank to another. Also read : Features and Tax Benefits of Sukanya Samriddhi Yojana (SSY) for Girl Child
2. National Savings Certificate
The National Savings Certificate (NSC) is backed by the Government and encourages small and medium-income investors to invest over a period to earn fixed returns. A secure investment option, you can open an NSC at any post office.This option offers you an annual fixed interest rate and ensures a regular income. Any principal you invest (up to Rs 1.5 lakhs annually) under this scheme is eligible for tax savings under Section 80C . NSC offers you the following benefits:• You can invest as little as Rs. 100 with no upper limit.• You can purchase an NSC from any post office after submitting the required documents.• You can transfer the certificate between individuals or post offices without affecting the interest.• You can use your NSC as collateral for loans.• Any interest you earn on your NSC is compounded and reinvested annually.• You have the option of nominating a family member, including minors to inherit your certificate.
3. Post-Office Term Deposit
Another popular investment scheme for your girl child, the Post Office Term Deposit (POTD) is offered by the Indian Postal Service. It is a fixed deposit scheme that allows you to invest your money for a fixed period at a competitive interest rate to earn returns. The amount you earn on maturity includes earned interest as well as the deposited amount.This scheme offers you the option to choose your investment period ranging from 1 to 5 years. You also have the flexibility to operate the account jointly or solely based on your requirements. This scheme requires you to make a minimum deposit of Rs 1000 followed by deposits in multiples of Rs 100. Given below are the benefits of Post Office Term Deposit Scheme:• It is eligible for tax deduction for 5-year term deposits under Section 80C.• This scheme offers you a guaranteed return on your investment.• Minors above the age of 10 are eligible for a POTD account.• The scheme also offers you a nomination facility.• You can transfer your account between post offices.• Since this scheme is backed by the government, it is a safe mode of investment.
4. Post-Office Recurring Deposit
The Post Office Recurring Deposit is an investment scheme that allows you to deposit a fixed amount every month for a fixed duration, at a fixed rate of interest. The scheme, offered by the Indian Postal Service, encourages regular savings while offering you a trustworthy investment option to fulfil the financial needs of your girl child. This scheme has a fixed tenure of 5 years, with an interest rate of 6.7% per annum and a minimum monthly investment of Rs 100. The Post Office Recurring Deposit Scheme does not have an upper limit on the amount you wish to deposit. You also have the flexibility to transfer the account from one post office to another.
5. Unit-Linked Insurance Plan
A Unit Linked Insurance Plan, or ULIP , is an integrated plan that combines insurance with an investment, making it a highly-recommended choice of investment for your girl child. Designed to meet long-term financial goals while providing you with life insurance coverage, this financial product gives you high returns on a range of investment options.A ULIP provides life insurance coverage, thereby ensuring financial protection for your family. This plan offers you several investment options such as balanced funds, debt funds, and equity funds- according to your financial goals and risk appetite. A ULIP has a lock-in period of 5 years and encourages long-term investment discipline. A policy holder is eligible to make partial withdrawals or surrender the policy after the lock-in period.Following are the benefits of the unit linked insurance plan:• Not only do ULIPs offer you dual benefits of life insurance coverage and investment opportunities, they also provide you with the flexibility of choosing your mode of investment based on your financial goals and risk appetite.• A ULIP enables you to accrue long-term wealth and meet the financial needs of your child.• A ULIP ensures that the nominee (child) receives a monthly payment in the event of the death of the parent.• ULIPs also offer tax benefits on maturity proceeds and premiums.
6. CBSE Udaan Scheme
Initiated by the Central Board of Secondary Education (CBSE), the objective of the CBSE Udaan Scheme is to offer academic support to girls from economically-deprived backgrounds. The scheme enables girls to prepare for various entrance examinations and achieve new heights in their education.This scheme offers free assistance to female students for Engineering entrance exams. It also offers several resources such as virtual classes, tutorial videos, doubt clarification, motivational sessions, and study material. The scheme offers monetary support or tablets to eligible students, clubbed with orientation sessions. As a parent, you will receive constant evaluation and feedback as well as assistance in the college application process.
7. National Scheme of Incentive for the Girls of Secondary Education
The Indian government has implemented the National Scheme of Incentive for the Girls of Secondary Education to promote female education and empowerment in the country. The government has introduced this scheme as recognition of the fact that girls must have equal access to secondary education.Launched in 2008, the scheme aims to encourage girl child enrolment in the secondary stage and decrease the rate of female dropouts as students enrolled under this scheme are retained until class 12 or the age of 18 years. Female students belonging to the Scheduled Caste and Scheduled Tribe from Kasturba Gandhi Balika Vidyalaya (KGBVs), private schools, or government schools are eligible to apply for this scheme.Female students receive an incentive of Rs 3000 when they enrol for class 9, in an account on their name. Girls can then withdraw the amount, along with interest, after passing their class 10 exams.
8. Balika Samridhi Yojana
Introduced in 1997, the Balika Samridhi Yojana was implemented by the Ministry of Women and Child Development. This scheme aims to promote the overall development and welfare of the girl child, prevent gender discrimination, and ensure education.The scheme promotes equal treatment of the girl child, ensures continued education through financial assistance, offers economic empowerment and financial independence, and aids in raising girl children till they reach marriageable age.
9. Fixed Deposits (FD)
You can opt for a fixed deposit as a form of investment for your girl child. This financial instrument allows you to deposit a sum of money for a fixed period at an interest. On maturity, you will receive your principal amount along with the accrued interest.You have the flexibility to choose the tenure of your fixed deposit. In case of a small deposit, you can also enjoy tax benefits as banks do not deduct tax up to a certain threshold. Also read : Benefits & Features of Fixed Deposits (FD)
10. Children Gift Mutual Fund
A Children Gift Mutual Fund is crafted explicitly with the aim of saving and investing for a child’s future. This product is a disciplined way of building long-term wealth to provide your girl child with financial security as she grows older. This financial instrument works on the principle of early investment and the power of compounding with time.The Children Gift Mutual Fund permits long-term savings for higher returns. Managed by experienced professionals, this fund invests in a diverse range of assets to reduce risk of an individual investment on overall amount. As a parent or guardian, you can contribute to the fund and vary your investment based on your financial situation.
11. Mutual Funds via Systematic Investment Plan
You can choose a systematic investment plan (SIP) to invest an amount of your choice every month in mutual funds. If you opt for this method of investment for your daughter, you can invest in several SIPs simultaneously, starting with an amount as low as Rs 100. You also have the option to choose from equity, mixed funds, and debt. With advantages such as rupee cost averaging and the power of compounding, you also receive better returns in the long run. Also read: Lump Sum Investment Vs SIP
12. Gold ETFs
As opposed to investing in traditional physical gold, you can also consider investing in gold Exchange Traded Funds (ETFs) . Gold ETFs can be purchased online and are a safer option when compared to storing gold. Also read: What is Post Office Tax-Saving Scheme? 5 Things To Know
Conclusion
Investing in a girl child's future is not only a prudent financial decision but also a significant contribution to gender equality. The right investment mix should align with your financial goals, risk tolerance, and time horizon. By considering these top 12 investment options in India, you can pave the way for a secure and prosperous future for your beloved daughter. It is crucial to consult with a financial advisor to tailor your investments to your unique circumstances and objectives while ensuring the best financial future for your girl child. Also read: Investing for a 3-year horizon? Check out these 9 plans
FAQS - FREQUENTLY ASKED QUESTIONS
What is the best investment option for a girl child in India ?
Investing for a girl child in India is a thoughtful and beneficial financial planning strategy. Here are some of the best investment options for a girl child in India:
Sukanya Samriddhi Yojana (SSY): SSY is a government-backed savings scheme specifically designed for the girl child. It offers an attractive interest rate, tax benefits, and a long-term savings solution for her education, marriage, or other life events.
Children's Gift Mutual Fund: Mutual funds designed for children's education or future expenses can be a wise choice. They offer diversified investment options and the potential for capital appreciation over the long term.
National Savings Certificate (NSC): NSC is a fixed-income investment option with a fixed interest rate, making it a stable and secure choice for your child's savings.
Post Office Term Deposit (POTD): Post office term deposits provide a fixed interest rate and various tenures to choose from. They are backed by the government, ensuring the safety of your investment.
Unit Linked Insurance Plan (ULIP): ULIPs are a combination of insurance and investment. They offer life insurance coverage along with investment opportunities in various asset classes. ULIPs can be used for long-term financial goals, including a girl child's education or marriage.
When is the right time to start investing for my child/children ?
Investing for your girl child's future is a wise financial move. Starting as early as from their birth and being disciplined in your investments will help you build a substantial corpus for your girl child's future. Here's a step-by-step guide on how to start investing for your girl child:
Set Clear Financial Goals: Begin by defining your financial goals for your girl child, such as education, marriage, or other life events. Having specific goals will help you determine the amount you need to save and the investment horizon.
Assess Your Budget: Evaluate your current financial situation and determine how much you can afford to invest regularly. Creating a budget can help you allocate a portion of your income to your child's investment fund.
Choose the Right Investment Account: Select a suitable investment account or plan for your child. Common options include Sukanya Samriddhi Yojana (SSY), Children's Mutual Funds, Public Provident Fund (PPF), or Unit Linked Insurance Plans (ULIPs). Each option offers distinct benefits and features, so choose the one that aligns with your goals and risk tolerance.
Open the Account: Once you've chosen the investment plan, open the account in your child's name. Ensure you complete all the necessary documentation accurately.
Regular Contributions: Make regular contributions to the investment account according to your budget. Set up automatic transfers or deposits to ensure consistency in your investments.
Explore Tax Benefits: Many child investment plans offer tax benefits under Section 80C and Section 10(14) of the Income Tax Act. Be sure to take advantage of these benefits to optimize your savings.
Diversify Investments: Consider diversifying your investments across various asset classes, such as equity, debt, and fixed-income instruments. Diversification can help manage risk and potentially enhance returns.
Monitor and Review: Keep track of the performance of your investments. Review your investment portfolio periodically and adjust as needed to stay on track with your financial goals.
Stay Committed: The key to successful investing is consistency. Stay committed to your investment plan, even during market fluctuations.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
