There are a host of investment options specifically designed for the girl child, but there is no designated investment plan when it comes to building a corpus of funds for your male child’s future. Parents and guardians need to begin investing early for their children so that there is less tension when the child grows up.
Be it higher studies or a marriage plan, having a solid fund is always a good idea. However, while investing one should ensure the exit policies, risk-factors involved and long-term returns.
One of the most popular investment options are direct equity investment and mutual funds. In the long term, both have high returns but also come with a considerable amount of risk. To begin with one can consider investing a minimal amount of Rs 1000 each month in mutual funds to garner some experience. Mutual funds charge annual fees or commissions that can eventually affect your overall returns.
Considering the safety and risk-free returns, parents also consider fixed deposits with banks or post offices. The FDs can be renewed easily and are hassle free.
One can also consider life insurance policies which help build a finance corpus. The plans are designed to meet the educational and other requirements of children along with risk covers. The premium depends on the choice of plan and your child’s age.
For low-risk investment and tax benefit, investors can opt for a Public Provident Fund (PPF). PPF account earns a fixed 7.9 percent interest rate and has a lock-in period of 15 years which can be extended to another 5 years. Tax exemption under Section 80C is permitted for up to Rs 1.5 lakh.
Electronic variants of gold (or gold ETFs) have also proven to be beneficial for long-term investment. While, physical gold looks more attractive in form of jewellery but that carries a lot of safety risk and also has additional expenses like the making charge. The Exchange Traded Funds and Sovereign Gold Bond (SGB).