Best Investment Plan for Girl Child in India
To ensure your daughter’s future, you must have started researching about the best investment plan for a girl child in India. The best savings strategy for girls should include elements that help them to take advantage of more opportunities for higher education and realize their future goals.
In India, banks and post offices provide a variety of excellent investment opportunities that guarantee a better future for a girl child. However, parents must be aware of such plans in detail, so that they can opt for them and make the most of them.
What are the Best Schemes for a Girl Child?
The best investment plans for a girl child in India are listed below –
SSY(Sukanya Samriddhi Yojana)
Sukanya Samriddhi Yojana (SSY) is a girl child prosperity scheme. It is an ideal investment plan for girl children. In the year 2015, this investment plan, specially designed for girl children, was launched under the “Beti Bachao Beti Padhao” plan by the Prime Minister. The policy term is until the child becomes 18 or 21 years old. The minimum and the maximum investment amount is INR 250 and INR 1.5 lakh in one financial year, respectively. A family can’t open more than two accounts. Only one account per girl child is allowed. This policy has a lock-in term, i.e., till the time she attains the age of 18 or passes 10th standard. This program supports parents in opening an account at a commercial bank or a post office to help them safeguard their daughter’s future financially.
Benefits of this Plan
- It provides an interest rate of 8.0%. This rate is revised by the Government quarterly.
- Income Tax exemption of up to INR 1.5 lakh is offered under Section 80C of the Income Tax Act, 1961.
- Account holders are eligible to make partial withdrawals after the lock-in period is over. These withdrawals can be made for a maximum of 50% of the account balance, and the withdrawn amount can be used to meet expenses related to the girl child, such as her education, wedding, or medical needs.
- Provides guaranteed maturity benefits when the girl child attains the age of 21.
- Parents of a girl child whose age is 10 or less are eligible to invest in this scheme in her name.
Children Gift Mutual Fund
The Children Gift Mutual Fund is an investment plan for girl children that is suitable to secure your daughter’s future. The plan comes with a lock-in period of 5 years, till the time the girl child attains 18 years of age. These are further subdivided into hybrid-equity or hybrid-debt funds. A Children Gift Mutual Fund is hybrid-equity when 60% of its asset allocation is in the stock market. Similarly, if the plan’s 60% assets are invested in debt funds, then it is hybrid-debt.
Benefits of this scheme
- The lock-in period helps earn high returns.
- Investing money into this plan fosters long-term financial stability.
- The diversification between equity and debt allows the investor to mitigate the possible risks due to market volatility.
- Parents can get better prepared for their daughter’s future.
- Monitoring funds under this policy can be done simply and easily.
- No taxes are levied on the plan.
Parents or legal guardians may make this investment plan in the name of their minor daughter.
Post-Office Term Deposit (POTD)
Post Office Term Deposit is a girl child investment plan similar to bank fixed deposits (FDs). In this investment, you can save money for a specific amount of time to receive definite returns. Under this plan, the money deposited and the interest accrued are included in the maturity amount.
Benefits of this Plan
- The minimum investment amount is INR 1000 and the maximum has no limit.
- It has a lock-in period of 1 to 5 years.
- Tax benefits of up to INR 1.5 lakhs are offered under Section 80C of Income Tax Act, 1961.
- It provides decent returns in low minimum deposits.
- Since it is backed by the Government, it is a relatively safer investment plan.
Also Read: Best Investment Plan for Girl Child in India
National Savings Certificate (NSC)
National Savings Certificate is a post office scheme created by the government that can be a good investment option, with low risk, if you want to save for your girl child.
Benefits of this Plan
- The minimum investment is INR 1000 and in multiples of INR 100 after that.
- The maximum investment has no limit.
- The investor can earn an interest rate of 7.7% (revised by the Government every quarter).
- Tax benefits up to INR 1.5 lakh can be availed under Section 80C of Income Tax Act, 1961.
- The Plan offers a 5-year lock-in period.
- The account can easily be transferred from one person to another.
- Premature closure is allowed under certain conditions.
- You can buy as many NSCs as you want as there is no restriction.
- Any Indian citizen can open the account individually or jointly.
- A parent/ legal guardian in the name of a minor child
- A minor can open an account in his/her own name after 10 years of age.
Public Provident Fund (PPF)
A Public Provident Fund or PPF has a lock-in period of 15 years. This is one of the long-term saving schemes that help the parents in building a solid financial foundation for their kids, whether for a boy or a girl. The PPF’s collected funds might be used for educational expenses, marriage, and other expenses.
Benefits of this Plan
- The minimum investment amount is INR 500 and the maximum amount is INR 1.5 Lakh in one financial year.
- The rate of interest for the year is 7.1%., which is compounded annually.
- The tax benefit ofINR 1.5 Lakh can be availed under Section 80C of the Income Tax Act, 1961.
- You can open a PPF account at any bank or post office that provides this service.
- When the account is in the 7th running year, you can withdraw up to 50% of the account balance.
- When the account completes two years, the investor becomes eligible to get a loan against the account balance. The eligible limit for this is 25% of the account balance.
- The investor should be an Indian citizen.
- Only one account can be opened per individual.
- A legal guardian can open this account in the name of a minor.
It is critical to be financially ready for your child’s requirements. Many parents believe they have planned everything and are ready to face life’s obstacles, but unforeseen events might happen, and the funds they had set aside for their girl child seems insufficient. So, you should invest in reliable financial tools to stay equipped for such circumstances. Every insurance policy and plan have advantages and features. The choice is ultimately up to you and what your child needs. Be sure to weigh all of your options before putting your hard-earned money into an investment plan for your girl child.
Frequently Asked Questions (FAQs)
Is taking out an education loan preferable to using retirement funds?
One of the top concerns for parents is paying for their child’s education. The choice between an education loan and retirement funds completely depends upon your requirements. However, it’s never wise to deplete your savings. Therefore, opting for an education loan may be a better choice.
Which mutual fund should I use for which purpose?
If you are investing early, then you may opt for the mutual funds that offer returns over the long-term. Similarly, if your investment goal includes meeting any urgent financial need, then you may opt for the mutual funds that offer returns over a short duration.
Are lock-in periods in children investment plans beneficial?
Lock-in periods can prove to be beneficial as they don’t allow you to withdraw any money during that duration. And the longer you stay invested in any plan, the better returns you earn. As a result, a lock-in period in child investment plans can help you save a higher corpus for their future.
How to ensure picking the right investment plan for your girl child?
Your choice of investment plan must depend upon your girl child’s future goals and aspirations, your current budget, how much risk you are willing to take, and how long you are willing to stay invested in any scheme.
Do children’s mutual fund plans include both stock and debt investments?
Yes, child mutual funds include both stock and debt instruments. These are hybrid or balanced funds designed to diversify the investment portfolio and therefore mitigate the potential risk of investing in only one type of asset class.