The annual rising cost of education has forced parents to plan their investments early. The fees for courses like medical, engineering, management, or studying abroad are rising so rapidly that relying solely on savings has become difficult. Proper investments not only ease the burden but also significantly help children in getting a better education in the future. If children are still young, even starting with a small amount can build a substantial corpus over the long term. The most important thing is to understand which investment option offers lower risk and better returns.
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PPF: A reliable instrument for stable returns
The Public Provident Fund (PPF) has long been considered a symbol of safe investment. It is the right choice for parents who want to build a fund for their children’s future needs without risk. It has a lock-in period of 15 years, making it ideal for long-term goals like education. Currently, PPF offers an annual interest rate of 7.1 percent. Investments can range from a minimum of ₹500 to a maximum of ₹1.5 lakh annually. Interestingly, even after maturity, the amount can be extended in 5-year blocks. This also offers tax benefits, further reducing the financial burden on parents.
Mutual Fund SIPs: The Path to Smart Growth
If you want to build a substantial corpus for your children’s education, a mutual fund SIP is a wise choice. While it involves market risk, the power of compounding significantly offsets this risk over the long term. A SIP investment journey of ten to fifteen years can multiply your education fund. The ability to start with a small investment and increase the amount each year makes it even more attractive. For parents who understand market dynamics and want to invest with a long-term perspective, mutual funds are a good option. The market will fluctuate, but growth opportunities always exist.
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Sukanya Samriddhi Yojana: A Secure Future for Daughters
If you have a daughter in your family, the Sukanya Samriddhi Yojana (SSY) scheme is extremely beneficial for her education and future security. This government-run scheme currently offers a high interest rate of 8.2 percent. An account can be opened in the name of a daughter under the age of ten. The investment period under this scheme is 15 years, with the account maturing at 21. A minimum annual deposit of ₹250 and a maximum of ₹1.5 lakh can be made. The high returns can easily cover a significant portion of your daughter’s higher education. It is risk-free and offers tax benefits, making it a highly attractive option for parents.