Hi @Gowtham
Every parent wants to give their kids a solid financial future, and almost all include things like their children’s education and marriage on their list of financial objectives. One might not benefit from simply keeping money aside in a bank account because investments need to keep up with inflation. By getting started early, you give the power of compounding time to do its magic and help you build a sizable corpus.
In my opinion, these are some investment tools can be taken into account when you invest and save money for children:
- Sukanya Samriddhi Yojana: It is best for a girl child. It is a savings scheme to cover the girl child’s education and wedding expenses. The scheme offers income tax deductions on savings and fixed interest rates against the deposits.
- PPF: The Public Provident Fund (PPF) account has a lock-in period of 15 years and can be opened with a bank or post office. A PPF account can be opened in one’s own name as well as in the name of a minor. Interest is generally obtained at higher rates than standard FD rates and is tax-free to the investor. For increments of five years, the account may be renewed. One of the few investment products, PPF, has the exempt-exempt-exempt (EEE) designation, which provides triple tax exemptions. You receive tax exemption at the time of investment, accrual, and withdrawal, according to this.
- Equity Funds: Since investments are made in equities, returns from such investments tend to beat the rate of inflation and enjoy liquidity benefits as well. Example: ELSS, ULIP etc
- Life Insurance Products
- Investment in Gold
- Bank Fixed Deposits
Read more about Income Tax Deductions a Taxpayer can Avail - Learn by Quicko
Hope this helps.