Top 5 schemes for a girl child in India
Fixed deposits (FD)
The funds deposited in an Fixed Deposit account earn interest at a predetermined rate for a given tenure. At the end of the tenure, the principal plus interest is paid to the depositor. Parents can invest in fixed deposit schemes for the girl child from banks, NBFCs, or the post office. Financial institutions like Bajaj Finance offer one of the highest interest of up to 8.65% p.a. on their FD. Parents can swiftly initiate investment for the girl child by booking the FD online via the Bajaj Finserv website or app.
Here is a run-down of the features and benefits of FDs:
- Fixed depsoit offer flexible investment tenures ranging from 7 days to 10 years. They also come with flexible pay out options (monthly, quarterly, half-yearly, annually or at maturity).
- FDs offer stable and guaranteed returns.
- Premature withdrawals are permitted, ensuring easy accessibility to funds when parents need to meet the girl child’s immediate needs.
Parents can use FD receipts as collateral for loans to raise funds for the child’s higher education dream.
Sukanya Samriddhi Yojana (SSY)
Introduced in 2015 as part of the Beti Bachao Beti Padhao campaign, SSY is a government-backed savings scheme targeted at the welfare of girls. Under the SSY scheme, guardians or parents of a girl child below 10 years can open an SSY savings account in the child's name at any authorised bank or post office branch.
- SSY offers the following features and benefits:
- The minimum deposit amount is Rs. 250, and the maximum deposit amount is Rs. 1,50,000.
- The current interest rate for 2024-2025 is 8.2%, compounded annually. This ensures higher returns than any other small savings scheme.
- Contributions to the SSY accounts need to be made for 15 years. The investment matures after 21 years from the date of account opening or when the girl child marries after crossing 18 years of age. Withdrawals can be made to fund the girl child’s education or marriage.
- SSY investments qualify for triple tax exemption. The amount invested, interest earned, and maturity payout are all tax-free.
Children Gift Mutual Funds
This type of mutual fund is tailored to help parents save and invest for the girl child’s future financial requirements, like higher education and marriage expenses. Parents can start investing early to build long-term wealth for the girl child through the power of compounding.
Here’s a list of their features and benefits:
- A Children Gift Mutual Fund can only be purchased by a parent or guardian on behalf of a minor child.
- Parents can choose from debt or funds, tailoring their investment as per their risk appetite.
- Children Gift Mutual Funds are long-term investment avenues since they can be redeemed once the child attains 18 years of age.
- These MF schemes offer flexibility to parents since they can increase or decrease investment to the fund depending on their financial situation.
- These funds are often used to cover the expenses of higher education. When a daughter is eligible for college, parents can rely on the returns from their return to pay for tuition, books, accommodation, and other college-related costs.
Unit Linked Insurance Plan (ULIP)
ULIP-based child plans offer you the flexibility of investing as per your needs to save for your child’s future financial requirements. ULIPs provide extensive life coverage for the parent, guaranteeing a sum assured payout to the girl child in the event of the parent’s unfortunate demise.
Regarded as some of the best plans for a girl child, ULIPs offer the following features and benefits:
- ULIP-based child plans can be purchased either by parents or grandparents.
- Child ULIPs offer investment flexibility to the parents. They can choose from equity, debt, or balanced funds based on their risk appetite and returns expectation. Diversifying your investment portfolio helps mitigate risks while ensuring maximum returns.
- ULIP tenures can vary from 10 to 15 years. Most plans come with a 5-year lock-in period, after which premature withdrawals are permitted to meet the requirements of your girl child.
- A child ULIP policy makes payments twice. The sum assured is paid to the child upon the parent's demise, and the fund value is paid to her upon maturity. This makes it one of the best policies for the girl child.
National Savings Certificate (NSC)
NSC is one of the most popular post office saving schemes in India. This government-backed fixed-income savings scheme is designed to foster savings habits among low and medium-income investors. With no minimum age limit and complete capital protection, NSCs make the perfect choice for parents with a low-risk appetite seeking stable returns for their girl child. Parents can start building financial security for the girl child with a nominal minimum investment of Rs. 1,000.
Here’s why NSC should be added to your best plans for girl child list:
- The principal amount invested qualifies for a tax deduction of up to Rs. 1.5 lakh under section 80(C).
- NSC investments earn an annual fixed interest, where the government revises the interest rate quarterly.
- The interest is compounded annually. It gets reinvested by default and is paid only on maturity.
- National Savings Certificates can be used as collateral for secured loans to raise funds for the education of your girl child.
- NSCs have a lock-in period of 5 years. Premature withdrawals or an early exit are permitted only under specific conditions, like the death of the investor or by court order.
Also read: Senior citizen savings schemes
Conclusion
These best investment plans for a girl child blend security with growth to help them accomplish their goals in the long run. Each of the plans highlighted above offers distinct benefits to the girl child. So, instead of parking your funds in just one savings scheme for the girl child, you can balance market-linked investments like ULIPs with risk-free instruments like FD to mitigate risks and maximise returns.
