What are the Best Investment Options for Your Kids' Future?

1. Investments in Public Provident Fund

The Public Provident Fund is a government-backed scheme that provides you with fixed returns. Hence, the risk associated with this scheme is much lower when compared to mutual funds. The government revises the interest percentage every year for increased returns.

This investment plan usually has a maturity period of 15 years. You can also save substantially on taxes as the principal, benefits, and interest is tax-free. Thus, it serves as a perfect option for securing your kid's future.

2. Investments via Fixed and Recurring Deposits

Fixed deposits act as a long-term investment option for your child's financial security. Thi is so because the risk associated is comparatively low when compared to mutual funds. You can avail this scheme easily from your bank. Several banks provide you with a separate scheme for your children and allow premature withdrawal of money.

Alternatively, for the recurring deposit schemes, you will have to make investments at fixed time periods. Since the rate of interest is constant, you can rightly estimate the returns from this plan. However, its only drawback is that the returns are much lower when compared to the fixed deposit schemes.

3. Investments in Equity Mutual Funds

Investing in equity funds is a bit risky considering their volatility. However, if you devise an appropriate strategy and select suitable funds for investing, you can make enormous profits from your investments.

You can use this money to fund your kid's education at a top university. Also, your kids can use this money to finance their dream start-ups. So, before investing, you must gather sufficient knowledge about the risks associated with avoiding losses.

4. Investment in National Savings Certificate (NSC)

This is a government-introduced scheme from which you can expect fixed returns at definite periods. You can easily register for this plan from your nearby post office branch. The maturity period for this scheme is usually five years.

Additionally, you can claim tax benefits on the principal. This allows you to save substantially on taxes. Moreover, you should keep in mind the minimum investment amount under this scheme is ₹1000.

5. Investments in Gold

The non-depreciating nature of gold's price makes it a valuable asset to secure your child's future. Another plus point of investing in gold is that it can act as a hedge against inflation. In addition to this, you can get substantial credit against your jewellery to meet the urgent need for funds.

The government has also introduced gold deposition schemes from where you can get money against your ornaments. This way you can easily fund your child's education and other future activities using this yellow metal.

6. Invest in Unit-Linked Insurance Plans

7. Investments in Insurance policies

8. Investments in Sukanya Samriddhi Account (SSA)

The government introduced Sukanya Samriddhi Yojana to provide financial assistance for the education of a girl child. Before the girl child turns ten years old, her parents can visit their nearest post office to register for this scheme. It is valid till 21 years or till the girl gets married.

However, once she turns 18, she becomes eligible to operate her account on her own. The government revises the interest percentage every quarter for increased returns. Thus by the time she turns 18, she will have enough money to fund her education or marriage using this amount.

1. Determine How Comfortable You Are With Taking Risks

The first and foremost factor that you should consider is determining how much risk you are comfortable with. The main reason for this is that the return percentage is directly proportional to the volatility of a fund.

Hence, if you are looking for an increased profit, you will have to select high-risk options. However, if you are comfortable with lower returns and are not ready for many risks, you can choose your investments accordingly.

2. Opt For a Balanced Mix of Investments for More Profit

3. Consider Your Present Income and Future Financial Goals

It is essential to determine your current income accurately so that you can know how much money to invest. If you do not calculate the same, there are high chances that you will end up investing more which would lead to a compromise in your current lifestyle.

Moreover, you should also determine how much money would be sufficient enough to meet the future needs of your kid. This way, you can invest the surplus money in other areas to ensure a fulfilling life.

4. Take Into Account the Rise in Costs

With time, there is a sharp rise seen in the fees of colleges and additional expenses. Hence, while estimating the investment amount, it is essential to consider the inflation in educational costs.

5. Try to Start Investing As Early As Possible for Increased Returns

6. Go for Safer Options in Case of Short-Term Investments

Investing in volatile funds is profitable only if you go for long-term investments. However, if you have short-term plans, you should go for those investment options that are not much volatile and can give you fixed returns.

Considering the number of available investment options for child, you should make immediate decisions to secure their future financially. This will provide several benefits to your kids in the long run.