Deciding on an investment plan for a girl child is one of the most crucial decisions for parents. The primary objective of an investment plan is to enable you to increase your wealth over time & help you achieve long-term financial goals, like planning retirement, purchasing a house, ensuring children’s higher education, etc. To secure the financial future of your daughters, there are many investment options which may best suit you.
Different Investment Options Available for a Girl Child
Here are some of the investment plans that can be chosen to get secure & steady returns for your girl child.
Sukanya Samriddhi Yojana Scheme
Sukanya Samriddhi Yojana (SSY) is a government-backed child savings plan designed to secure the financial future of a girl child. It was launched in 2015 under a government scheme called “Beti Bachao, Beti Padhao for a girl child’s welfare. This scheme offers financial security to them, hence helping to meet their girl child’s education expenses, marriage expenses or any other future needs.
- It is the best investment plan for girl child less than 10 years of old.
- The minimum amount to be deposited is INR 250, & the maximum is INR 1.5 lakhs.
- This scheme is valid for 21 years from its investment date or till the girl gets married, whichever is earlier.
- The present interest rate is 8% p.a.
Unit-Linked Insurance Plan (ULIP)
ULIPs are insurance cum investment plans which offers dual benefits to meet the long-term financial obligations along with providing life insurance coverage. The premium amount paid is diverted towards the funds opted for, & the remaining amount is allocated towards life insurance.
- ULIP offers dual benefits of insurance & investment, allowing for wealth growth & financial security for family members.
- It offers many fund options, such as equity for high growth & debt for stability, which fulfils all types of risk tolerances.
- It provides flexibility, allowing you to switch your investments according to market conditions & your risk tolerance level.
- Get a tax deduction on the amount of premium paid u/s 80C, & the amount of proceeds to be received on maturity is exempt from tax u/s 10(10D).
- Withdraw funds partially from your fund value after the lock-in period of 5 years is completed to meet emergency situations.
National Savings Certificate (NSC)
These are issued by the Indian government, allowing senior citizens to make secure & reliable investments. This plan offers a fixed income source along with a pre-defined tenure, which best suits those who are reluctant to take risks.
- The maturity period for the NSC is 5 years.
- There are two types of NSC certificates, namely Type VIII & Type IX; at the moment, only Type IX is open for subscription.
- It allows a claim of a maximum of INR 1,50,000 u/s 80C of the Income Tax Act, 1961.
- This scheme offers a guaranteed return of 7.7%, which is typically considered higher than fixed deposits.
- The initial minimum deposit amount is INR 1000, which can be increased later on.
- This scheme can be bought from any post office once the documents are submitted & KYC has been completed.
- No early exit from the scheme is allowed.
- It can also be accepted as collateral by banks or NBFCs to get secured loans.
CBSE Udaan Scheme
The CBSE Udaan Scheme was initiated by the Central Board of Secondary Education (CBSE), in collaboration with the Ministry of Human Resource & Development (MHRD) of the Government of India. This scheme is designed for the academic future of Girl Child who belong to an economically low background.
- It offers online study material to female students, which will help them prepare.
- This scheme offers many virtual classes at around 60 locations in major cities in India.
- This scheme also provides girl students with tablets or financial support to buy one.
- Feedback & suggestions would be provided to parents to track the progress of their children on a continuous basis.
- The girl students who have acquired above 75% in Udaan classes & have been awarded seats in NIIT, IIT, or any other Central-funded institutions are eligible to get financial aid.
Fixed deposit (FD)
A fixed deposit is a type of savings plan issued by financial institutions or banks, where funds are deposited for a certain period of time ranging from a few days to several years. In return, banks pay investors the maturity amount along with a specified interest rate, which is normally higher than that on a savings plan. They are low-risk investments with guaranteed returns.
- They offer guaranteed returns with high rates in comparison to a savings account.
- Tax savings payouts come with a lock-in period of 5 years, under which tax exemption can be availed up to a maximum of INR 1.5 lakhs.
- Fixed deposits get renewed automatically on maturity.
- Multiple fixed deposits can be opened at different banks.
- It comes with a flexible tenure ranging from 7 days to 10 years,
Public Provident Fund (PPF)
A Public Provident Fund is a type of long-term investment plan backed by the government of India, offering attractive interest rates along with returns. It offers secure & stable returns as they are not market-linked.
- PPF is a well-designed long-term investment plan with a minimum tenure of 15 years, which can further be extended for a block period of 5 years.
- One can open a PPF Account with a nominal amount of INR 100 per month.
- The minimum investment limit is INR 500, & the maximum limit is INR 1,50,000 every financial year.
- The funds should be deposited into the PPF account a minimum of once each year for 15 years.
- The mode of deposit can be cheque, cash, online fund transfer, or demand & draft.
- As per section 80C of the Income Tax Act, 1961, the maturity amount & the proceeds from interest are tax-free.
- This account allows the partial withdrawal of funds from the 5th financial year onwards.
Conclusion
The most relevant time to start with a child investment plan is now, which means the sooner, the better. Hence, with the help of considerate planning, one can meet the financial obligations related to their children’s milestones, hence providing them with a brighter & more secure financial future. Additionally, your investment decision should align well with the investment horizon, risk appetite, & financial objectives. Hence, a wise investment, staying informed, & a holistic approach lead to a secure financial future for your girl child.
