A new born baby in the house is perhaps the most auspicious event for any family. However, it also marks the beginning of a new kind of responsibility. In addition to ensuring the well being of the baby it is also crucial that you be concerned about the financial well-being of your baby. We understand you are busy but for a lot of these investments classes you don’t need to make time to invest. For instance with gold you can just be at home taking care of your baby while parallely tracking 1 gram gold rate in Kerala or Chennai and then going onto invest online. We will get into that detail later. So let’s get started with some of the best investment options for your baby:
- Public Provident Fund (PPF) Account
A PPF account is another smart long-term investment option for children, as it is an investment as well as tax saving instrument. It is an ideal way to instil in children the habit of saving money, while also helping them build a corpus for their future needs. A PPF account can be opened in any bank or post office and offers assured returns at 8% per annum.
- National Savings Certificate (NSC)
NSCs are another long-term investment option that is an ideal way to teach children the importance of savings. NSCs offer a good rate of interest and are backed by the Government of India; hence, they are extremely safe and reliable. The interest earned on these certificates is compounded annually and credited to the certificate every year but will not be payable until maturity.
- Suitable ULIPs
You could invest in a suitable unit-linked insurance plan (ULIP) offered by reputed insurance companies like LIC, HDFC Life, etc. The best ULIP plan provides life cover as well as market exposure to your child’s investment portfolio. Compared to other traditional investment options, ULIPs offer better tax benefits under Section 80C of the Income Tax Act. You can choose from a range of ULIP plans depending on your financial goals and risk appetite.
- Sukanya Samriddhi Account (SSA),
The Sukanya Samriddhi Account (SSA), launched by the Indian government in 2015, is one of the most popular investment options for the long term financial planning of a girl child. The scheme helps you save for your girl child’s life stages such as education, marriage, etc.
The Sukanya Samriddhi Account offers an interest rate of 7.6% and has a maturity period of 21 years. Sukanya Samriddhi Account is operated by post offices and commercial banks across India. It is a kind of savings cum insurance plan that allows partial withdrawal after the girl attains 18 years of age.
- Gold ETF/Funds
Investments in gold ETF/Funds can be easily one of the most practical investments you will do for your child. This is truer especially if you have a girl child since in the Indian culture gold is a mandatory requirement in marriages so this gold can be used for at the time. You can easily invest and trade gold funds or ETFs online. All you need to do is lookup today’s gold rate in Nandyal or whichever city you are from and then make the purchase through an online portal. The one added benefit of investing in these funds over the traditional physical gold is that you don’t need to worry about safe storage or theft. Additionally, when the prices go up you can easily sell these off from the comfort of your home and then use the money to invest in physical gold if you want.
- Recurring Deposit (RD)
A Recurring Deposit account works like an FD account but with monthly deposits which makes it easier to invest without having to invest a large lump sum initially. It is one of the best options to build good savings habits in your child from an early age and also teach them about financial planning while they are young. RDs are more affordable than FDs and come with higher interest rates that range between 7% to 8%.