By News18
As a parent, planning for your child鈥檚 education is one of the most important financial decisions you鈥檒l ever make. Starting early and choosing the right savings strategy can make all the difference, whether it鈥檚 for school, college or higher studies abroad. Fortunately, there are several government and private investment schemes in India designed specifically to help parents secure their child鈥檚 academic future. Here鈥檚 a look at some of the most effective options available.
Government Schemes
The Indian government offers multiple low-risk and high-benefit saving schemes for children鈥檚 education, listed below:
Sukanya Samriddhi Yojana (SSY): A government-backed saving scheme that promotes girl education and welfare, the Sukanya Samriddhi Yojana provides high interest rates, which makes it an attractive saving scheme option for parents looking to secure their child鈥檚 future. The government also makes it an accessible savings scheme by allowing parents to open an SSY account with a minimum deposit.
Public Provident Fund: It allows parents to make long-term savings with a 15-year lock-in for their children鈥檚 education, offering income tax benefits in addition to fixed-rate returns. PPF is an excellent option for parents looking to make sufficient savings for a child鈥檚 education with its guaranteed returns and the power of compounding. Like SSY, investments in PPF qualify for tax deductions under Section 80C of the Income Tax Act, which provides enhanced savings on your contributions.
National Savings Certificate (NSC): It鈥檚 another government-backed savings scheme in India that offers a secure investment option with a five-year maturity period and interest rate of up to 7.7%. The NSC provides assured returns on scheme investment and also falls under tax benefits with investments qualifying under Section 80C.
Insurance Plus Investment Plans
Multiple banks offer parents insurance-based investment plans to safeguard their children鈥檚 education in India. LIC New Children鈥檚 Money Back Plan, HDFC Life YoungStar Super Premium Plan and ICICI Pru SmartKid Solution are some of the life and education covers parents can invest in with proven results. A combined plan of insurance plus investment allows parents to grow their savings through investments in Equity or Debt Funds. It鈥檚 a flexible investment strategy, quite ideal for those looking at a balanced approach for their child welfare security.
Mutual Funds
Taking to the financial market and investing in a solid Mutual Fund plan can yield high returns and prove to be another valuable source of growing and safeguarding your child鈥檚 educational savings. The Equity Mutual Funds help your money grow as it rises with the growth of an economy and undergoes compounding over time, while tackling inflation by providing higher returns.
However, Mutual Funds are subject to market risks. It is important for parents to assess their risk tolerance before going ahead with their investment. It is advised that parents should opt for Systematic Investment Plans (SIPs) to follow a disciplined investment strategy.