The government has launched several investment schemes that aim to benefit children in different ways. There are many schemes that can be good investment options for your children. Parents can choose the scheme that suits their investment goals, risk appetite, and tax requirements. However, it’s advisable to read about the scheme thoroughly before making any investment decision.
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Here are some of the popular ones:
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana is designed to encourage parents to save money for their girl child’s education and marriage expenses. The scheme offers a high-interest rate and comes with tax benefits.
Public Provident Fund (PPF)
PPF is a long-term investment option that is safe and offers attractive interest rates. Parents can open a PPF account in their child’s name, and the interest earned is tax-free. You can save Rs 1.5 lakh annually and minimum Rs 500 depending on your income and financial goals.
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Adhil Shetty, CEO, Bankbazaar.com, says, “Your investment in PPF must be in sync with your financial goals. If you are clear about your goals, you can quickly answer how much you should save in your PPF account. Suppose you need Rs 25 lakh in 15 years for your children’s education. So, if you save Rs 1 lakh annually and if we calculate at the current interest rate of 7.1%, then your total amount at maturity after 15 years would be Rs 27,12,139.”
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National Savings Certificate (NSC)
NSC is a fixed-income investment option that comes with a fixed interest rate and a five-year lock-in period. The interest earned is taxable, but investors can claim tax deductions under Section 80C.
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Equity-Linked Savings Scheme (ELSS)
ELSS is a mutual fund investment option that comes with a lock-in period of three years. It offers high returns and tax benefits under Section 80C. This product not only helps you save tax but also gives you decent returns.
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Kisan Vikas Patra (KVP)
KVP is a fixed-income investment option that doubles the investment amount after a fixed tenure of 124 months. The interest earned is taxable, but there is no TDS deduction.
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Senior Citizen Saving Scheme (SCSS)
SCSS is a savings scheme designed for senior citizens that offer high-interest rates and tax benefits. Parents can invest in this scheme on behalf of their children if the parents are senior citizens.
Every government scheme has its own eligibility criteria. Make sure you meet the eligibility requirements before investing. Also, it is important to check your financial requirements and income. Before investing, consult the policy advisor or the person who is promoting the scheme.
You must thoroughly read about the scheme, go through terms and conditions, and check the amount you need to start the investment. Fill in your details carefully as if you make mistakes, it becomes challenging to do the correction later. Your details must be as per your documents to avoid any confusion later.
