Good news for investors. Also if you are a fresher in this field then this article is for you. Ensuring your kids have a solid financial future is a major duty for every parent. Kids will need funds for things like education, weddings, and other significant expenses as they grow up. To make sure you have enough money when those times come, it’s crucial to diversify your investment strategies.
In India, there are plenty of investment options designed to meet these needs while providing both security and potential returns. Let’s explore some great investment choices.
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana is a government-backed savings program focused on securing the future of girl children. Parents or guardians can set up an account for a girl child who is under ten years old. The account matures either 21 years after it’s opened or when the girl gets married after turning 18.
As of 2025, this scheme offers an interest rate of 8.2% compounded annually. You can deposit anywhere from a minimum of Rs 250 to a maximum of Rs 1.5 lakh each financial year. Plus, it comes with tax benefits under Section 80C of the Income Tax Act.
National Savings Certificate (NSC)
The National Savings Certificate is a fixed-income investment option designed to motivate small to medium-income earners to save while also benefiting from tax deductions. It has a five-year maturity period and provides a competitive interest rate that gets updated periodically.
The interest you earn is reinvested and qualifies for deductions under Section 80C. NSC can be a reliable way to build funds for your child’s education.
Unit Linked Insurance Plans (ULIPs)
ULIPs are low-investment insurance products that combine life insurance with investment returns. A part of the premium goes towards life insurance, while the remainder is invested in either equity or debt instruments. These plans come with a five-year lock-in period and can yield high returns based on market conditions. They also provide tax advantages under Section 80C. However, it’s crucial to evaluate the associated fees and risks before diving in.
Mutual Fund SIP (MF SIP)
Systematic Investment Plans let you invest a set amount in mutual funds regularly. This approach fosters financial discipline and takes advantage of compounding over time.
Adhil Shetty, CEO of BankBazaar.com, mentions, “Equity mutual funds can potentially yield high returns in the long run, making them ideal for goals like funding higher education. While SIPs don’t provide tax deductions under Section 80C, some mutual funds, like equity-linked savings schemes (ELSS), do offer tax benefits. Investing through SIPs is one of the smartest ways to grow your wealth, but remember to consider the risks and market fluctuations.”
FD
Bank fixed deposits are classic investment options that guarantee returns over a specified period. Although the interest rates might be lower compared to other investments, their safety and reliability make FDs a popular choice for conservative investors. Some banks even offer special fixed deposits for children, which can help cover education expenses.
Public Provident Fund (PPF)
The Public Provident Fund is a government-backed investment option in India designed for the long haul. Right now, it offers a solid interest rate of 7.1%, which gets updated every three months, and the best part? The interest you earn is tax-free. Plus, your contributions can qualify for tax deductions under Section 80C. This scheme comes with a 15-year lock-in period, making it perfect for long-term objectives like paying for higher education.
Before you dive in, though, it’s crucial to evaluate the risks, potential returns, and the lock-in period of each investment option to ensure they fit your financial goals. Diversifying your investments can help reduce risk and boost returns.
