Best Investment Plan for a Child in Post Office

9 min read • Published 26 November 2022
Written by Anshul Gupta
Best investment plan for child in post office

The Department of Post has been managing many of the government’s social welfare initiatives encouraging parents to invest in their children’s secure future. Thus, parents can invest in several tailored schemes earning decent returns based on their children’s potential future needs. 

The generated corpus can help children fulfil their aspirations. In addition, the girl child gets the support of generated funds for an independent career without worrying about finances. So, let us start and explore the best investment plan for a child in a post office.

Best Post Office Investment Options for Child

Whether it is a post office scheme for a daughter or a son, you have multiple options. So choose a savings account, fixed deposits, and exclusive GOI-backed investment schemes for the children regardless of gender. 

The following table represents post office investment schemes for the benefit of children. 

Scheme Name Interest Rate PACompounding Frequency
PO Savings Account4.00%Annual 
Time Deposit (1-3 Years)5.50%Quarterly
Time Deposit (5 Years)7.50%Quarterly
5 Year Recurring Deposit6.20%Quarterly
Monthly Income Scheme7.40%Paid Monthly
National Savings Certificate (NSC)7.70%Annual
Public Provident Fund (PPF)7.10%Annual 
Kisan Vikas Patra (KVP)6.90%Annual
Sukanya Samriddhi Account (SSA)  7.60% Annual 

All the above schemes can help children when the corpus matures. So, let us elaborate on each for better comprehension. 

Post Office Savings Account

Any financial institution’s primary product helps individuals park their money and use it according to their necessity. So, let us learn more about the post office savings scheme for children.

  1. Benefits
  • The minimum deposit is Rs.500 without any upper limit for deposits. 
  • The applicable interest rate is 4% per annum.
  • The nomination facility is available.
  • You can avail of alternative banking channel services like ATM, e-banking, and mobile banking.
  1. Eligibility Criteria
  • An adult individual in single or joint names.
  • Guardian on behalf of minors under 10 years.
  • Minor children over 10 years under self-operation. 
  1. How to Apply for the Scheme 
  • Fill up the application form.
  • Complete KYC compliance using supporting documents.
  • Deposit the initial amount.

Time Deposit

The cumulative fixed deposit scheme is a one-time investment plan for a child in a post office, using a lump sum amount. Thus, the deposit has the following features.

  1. Benefits
  • Open any number of accounts for 1, 2, 3, and 5-year tenures.
  • The minimum deposit is Rs.1000 without an upper limit.
  • The applicable interest is 6.8 to 7.5% per annum, depending on the tenure, with quarterly compounding.
  • Premature closure and pledging of accounts are allowed, subject to compliance with rules. 
  1. Eligibility Criteria
  • Adult individuals in single or joint names.
  • Guardian on behalf of minors under 10 years.
  • Minor children above 10 in their name.
  1. How to Apply for the Scheme
  • Fill up the application form.
  • Complete KYC compliance using supporting documents.
  • Deposit the initial amount.

Also Read: What is the Post Office Monthly Income Scheme?

5-year Recurring Deposit Scheme

Here the investment is in monthly installments for 5 years instead of a lump sum.

  1. Benefits
  • The minimum deposit amount is Rs.100 without any upper limit.
  • The applicable interest rate is 6.2% per annum (quarterly compounded).
  • Premature closure after 3 years and loan facility after 12 months from the account opening date.
  1. Eligibility Criteria
  • Adult individuals in single or joint names.
  • The guardian operates the minor’s accounts under 10 years and self-operates if above.
  1. How to Apply for the RD account
  • Fill up the application form.
  • Complete KYC compliance using supporting documents.
  • Deposit the initial amount.

Also Read: Best Investment Plan for Girl Child in India

Monthly Income Scheme

It is the best investment plan for a boy child in a post office, similar to the fixed deposit but non-cumulative with monthly interest payment.

  1. Benefits
  • The minimum deposit is Rs.1000 with a maximum cap of Rs.9 lakhs for a single account. The upper limit is Rs.15 lakhs for a joint account. 
  • The interest rate paid monthly is 6.70% per annum.
  • The maturity tenor is 5 years.
  1. Eligibility Criteria
  • Adult individuals in single or joint names.
  • Guardian on behalf of minors under 10 years. 
  • Children over 10 years under self-operation. 
  1. How to Apply for the MIS
  • Fill up the application form.
  • Complete KYC compliance using supporting documents.
  • Deposit the initial amount.

National Savings Certificate

You can consider the fixed income post office scheme for a girl child and a boy with tax-saving benefits. Moreover, it is one of the most flexible investment schemes managed by post offices.

  1. Benefits
  • The certificate matures in 5 years, earning 7.7% interest per annum with annual compounding. 
  • Almost all banks and financial institutions accept the instrument as collateral for extending loans. 
  • There is no bar on the number of certificates you own.
  • Premature closure is not allowed other than in exceptional circumstances like the death of the account holder or a court order.
  1. Eligibility Criteria
  • Adult individuals in single or joint names.
  • Guardian on behalf of the minors under 10 years. 
  • Children above 10 years under self-operation.
  1. How to Apply for the NSC
  • Fill up the application form.
  • Purchase the certificate with a minimum investment of Rs. 1000. There is no maximum limit.

Public Provident Fund (PPF)

PPF is one of the oldest government-sponsored small savings schemes for fulfilling long-term goals.

  1. Benefits
  • The investment tenure is 15 years initially and extended in 5-year blocks on request.
  • The minimum annual investment is Rs.500, while the maximum is Rs.1.5 lakhs per financial year.
  • The applicable interest rate is 7.1% per annum. 
  • Partial withdrawal is allowed after 5 years from the account opening date. 
  1. Eligibility Criteria
  • Adult resident Indians can open the account in their name or the name of a minor.
  • You can open only one account in your name.
  1. How to apply for the PPF
  • You can open the account in any post office or bank subject to KYC compliance.
  • Pay a minimum of Rs.500 every year to keep the account active.

Kisan Vikas Patra (KVP)

The investment is gender neutral, and you can consider buying the certificate as a post office scheme for the boy or the girl child. The investment vehicle is ideal for families of low and middle-income groups to protect their children financially. 

  1. Benefits
  • The minimum investment in the certificate is Rs.1000 and a multiple of Rs.100.
  • There is no upper limit.
  • The maturity period is 123 months at the current interest rate of 7.5% per annum.
  • The certificate does not allow any tax benefits.
  1. Eligibility Criteria
  • Any adult resident Indian can purchase the certificate in single or joint name.
  • Guardians can purchase on behalf of a minor.
  1. How to apply for Kisan Vikas Patra
  • Submit the relevant form at the post office.
  • Deposit the required amount

Sukanya Samriddhi Account (SSA)

  • As the name suggests, it is the best investment plan for a girl child in the post office offered by the Government, providing social security. 
  1. Benefits
  • The minimum investment is Rs.250 and the maximum of Rs.1.5 lakhs per year.
  • The scheme’s tenure is 21 years but you can stop making payments after 15 years from the opening date. Money can be withdrawn after maturity or upon a marriage after the girl turns 18.
  • The current interest rate is 8.0% per annum.
  1. Eligibility Criteria
  • Only parents or legal guardians can open the account in the girl’s name.
  • The girl child must be below 10 years on the account opening date.
  1. How to apply for the Sukanya Samriddhi Account
  • You can open an account in a post office or any bank.
  • You can open an account for two girls in a family.

Benefits of Child Plan

Since Indian post offices host government-sponsored schemes, especially for the benefit of children, you get several advantages. So, let us study a few important ones.

  • Hassle-free documentation and operation:

The investment process in a post office has easy enrollment and operations. In addition, the simplicity of these unmatched post office schemes attracts rural and urban customers with its product bouquet. 

  • Multiple investment options:

Parents have multiple options for securing their children’s future. Moreover, the minimum investment amounts are very low, making it affordable for every investor regardless of their financial status. 

  • Interest rates: 

The interest rates applied to the post office scheme for the girl child or boy range from 4% to 8.0% per annum. These rates are slightly higher compared to rates offered by large banks. Moreover, the investments are safe as they enjoy a sovereign guarantee. 

  • Tax benefits:

These investments not only allow financial security to the children, but parents also enjoy tax benefits. For example, PPF, NSC, and SSA offer exemptions up to Rs.1.5 lakhs a year under Section 80C of the IT act, 1961. 

Bottom Line

With the government’s backing, the post office child plans are reliable and safe. Whether it’s a girl child investment plan in a post office or for boys, they are affordable with comparatively better interest rates. These are the main reasons why post office investment plans are popular among parents willing to secure their children’s financial future.

FAQs

How are the interest rates decided on post office investments for children?

Post office investment schemes enjoy the Government of India’s sovereign guarantee. Accordingly, the Ministry of Finance notifies the applicable interest in the post office schemes under the small savings category every quarter in a financial year.

Are all post office investment schemes available for children?

Post offices offer several investment schemes, similar to banks. In addition, post offices provide several government-backed social welfare schemes. So, all investment plans suit students over 18 years other than the Senior Citizen Savings Scheme (SCSS), which only accepts investors above 60 years.

Why is the PPF account considered a tax efficient investment?

PPF account is a government-sponsored small savings account popular among the taxpayers for its tax-savings feature, which follows the “E-E-E” regime. It means that the annual investment, the accrued interest, and the maturity value are all tax-exempt during the entire investment cycle.

Under what circumstances can you make a partial withdrawal from the Sukanya Samriddhi Yojana account?

You can request a partial withdrawal from the Sukanya Samriddhi Account under two circumstances up to 50% of the balance. They are higher education or marriage of the girl child. For higher education, the account holder must have turned 18 and cleared the tenth standard exam.

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Anshul Gupta

Co-Founder
IIT Roorkee Alumnus and CFA with experience of structuring debt products worth more than 15000Cr for institutional and retail investors.

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