Ever since your child was born, you have done everything in your power to keep your
child happy and satisfied. You encourage them to dream big, and no dream is so big
that you cannot make it come true but at the same time, higher education expenses
continue to climb at astonishing rates per year at an estimated 15 to 20% every
year. It is important to look up suitable child investment plans while your child
is still young. Consider the following.
Child education insurance plan
Child insurance plans help pay the high costs of future education, even if the parent
is absent from the child's life. It is designed to take care of higher education
costs. If the child loses their parent before the plan matures, the child insurance
plan provider will normally waive off the remaining premiums but keep the policy
Sukanya Samruddhi Scheme
This is a Government-floated savings scheme for the girl child in India. Parents
of girl children are encouraged to save for their daughters by opening an account
and depositing money in it for a period of 14 years. The deposit limits are Rs 1,000
(minimum) and Rs 1.5 lakh (maximum) per year. The deposit matures 21 years after
the date of starting the account, and earns a high interest rate of 9.2%.
Personal term insurance
Perhaps the best investment for your child comes from ensuring that their dreams
are taken care of in large measure even in your absence. Taking a term insurance
policy is the best way to safeguard your child's higher education dreams. The high
sum assured provided by the life insurance pays for your child's every need, apart
from making provisions for their wedding as well.
This is one of the most reliable investments for your child. You can open a Public
Provident Fund (PPF) account in your child's name from a bank that offers PPF services.
The minimum yearly deposit per year is Rs 500, while the maximum is Rs 1.5 lakh.
The money is deposited for a period of 15 years, while partial withdrawals are allowed
after the seventh year of the deposit has elapsed. PPF pays interest at 8.5%.
Short term funds
It is always advisable to have a long window of maturity when investing for your
child's education, but there are short-term education-related expenses such as paying
school fees for secondary school, clothes and books, etc. which can be paid from
debt instruments like short term funds and bond funds with a lower maturity tenure.
You can expect returns in the range of 6 to 8% for these instruments.