While planning for the child’s future, you might find the funds to be insufficient at times. It is due to the increasing costs of education and other expenses that you need to deal with every month. Investing long-term serves two main purposes: building wealth and meeting future expenses that are likely to arise. You will find outlined below a few long-term investment plans that will help you decide which one will suit your needs.
Here are some best investment plans that can help you accumulate the necessary funds for your child’s education:
Sukanya Samriddhi Yojana
If you have a girl child and she is below 10 years of age, start investing in Sukanya Samriddhi Yojana (SSY). It is a government-backed scheme through which you can start depositing a minimum of Rs. 250 every month.
A maximum amount of Rs. 1.50,000 can be deposited annually in the SSY account. Once the girl reaches 18, you can withdraw 50% of the accumulated funds for her education. The remaining balance can be withdrawn for marriage purposes before she reaches the age of 21.
PPF i.e. Public Provident Fund can be opened in your child’s name even if you have a PPF account. You can invest up to Rs. 1,50,000 every year in the PPF account that would be jointly owned by your child and you.
Risk-averse people should consider provident funds as an investment option. It is possible to operate this account without internet skills by visiting a bank or post office. Along with a lock-in period of 15 year and the choice of extending the plan in blocks of 5 years, it is an investment option for the long term. Your PPF balance can be used as collateral for a loan. Additionally, accounts can be prematurely withdrawn after seven years.
A good thing about this investment option is that it qualifies for tax benefits up to Rs. 1,50,000 every year for the invested amount. Premature withdrawal is allowed for your child’s education if you submit the necessary documents. You can withdraw a provident fund online from the bank’s website in which you have opened a PPF account.
For hassle-free investment and withdrawal options, invest a substantial part of your savings in fixed deposits. However, ensure that the interest rates are high enough to generate the necessary capital for the future of your child.
Bajaj Finance FD comes with an interest rate of up to 6.50%. If you are a senior citizen, a 0.25% higher FD interest rate will be provided. Due to the high FD rates, your deposits can be locked-in cumulative FDs that generate higher returns due to the compounding of interest income. It is a great investment tool for your child’s future due to these reasons:
- Easy withdrawal
Bajaj Finance FD permits easy withdrawal of the deposits post completion of 3 months from the investment date. It means that your deposits can be withdrawn to handle unforeseen expenses or for the higher education of your child. Also, apply for a loan up to 75% of your fixed deposit value if you don’t want to break your investment.
- Generating monthly income
Some part of the savings can go in the Bajaj Finance non-cumulative FDs for generating a regular income. The option of monthly, quarterly, yearly, and six-monthly interest payouts enables you to meet your finances with ease. The interest income can be utilized for taking care of the books, tuition fees, and other educational expenses of your child.
- Multi-deposit facility
The multi-deposit feature allows you to split your savings into multiple FD accounts and you can choose varying tenors and FD types for each deposit. It enhances your liquidity options and also allows you to consolidate returns at a higher FD rate in the future. The flexible tenor options ranging from 12 to 60 months allow you to plan your investment goals carefully.
Bajaj Finance FD is the best fixed deposit for child education as it is a stable investment option. The high credit ratings offered by credit rating institutions like CRISIL and ICRA confirm this fact. Invest in Bajaj Finance FD through an online FD form will allow your deposits to grow at a 0.10% higher FD rate.
Investing in your child’s education is a smart decision but you must identify the instruments that can generate the required corpus. Though investment options like SSY and PPF are good options for generating enough returns, their withdrawal policies might be slightly complex. Also, these are long-term investments.
Bajaj Finance FD provides returns high enough to accumulate a substantial corpus for the higher education of your child. Moreover, its lenient withdrawal rules ensure that you can use it as a contingency fund at times of need. Also, it is a safe investment option as per the credit ratings offered by leading credit rating organizations like CRISIL and ICRA.