While there are many investment plans that are being hard sold today, including the equity mutual fund Systematic Investment Plans or SIPs, one needs more safe investments, when it comes to children. Here are three plans, which could be beneficial for the girl child.
Sukanya Samriddhi Accounts
This is one of the best investment schemes that is available in the country on account of many reasons. First, is that the current interest rate offered of 8.1 per cent per annum is one of the best from a government sponsored scheme. The second is that the interest is tax free in the hand of the investor. The third is that the amount invested, qualifies for tax exemption under Sec 80C of the Income Tax Act.
The minimum deposit can be for a small amount of Rs 1,000 and the maximum can be for Rs 1,50,000 in a financial year. Subsequent deposit in multiples of Rs 100 are accepted. The Deposits can be made in lump-sum and there is no limit on number of deposits either in a month or in a financial year. The interest rates are also much higher then what banks are currently offering.
The Public Provident Fund also enables you build a corpus for the girl child. Here again, the interest earned is tax free and the investment qualifies for a tax rebate under Sec 80C of the Income Tax Act. With interest rates rising, the rates of 7.6 per cent cannot be considered as the best.
Some NBFCs with AAA rated deposits are now offering even interest rates of as much as 8.75 per cent. However, these are all taxable.
The PPF with its tenure of 15 years, helps parents of a girl child to build an investment corpus. However, if you compare with the Sukanya Samriddhi account, the PPF is not a very attractive proposition, as the interest rates are much lower. Hence, if you have a girl child go for the Sukanya Samriddhi account.
Mutual Fund SIPs
If you are willing to take a risk, the best bet would be equity mutual fund SIPs. Over a longer term SIPs have given a solid return. However, we wish to state that there is no certainty that these would continue to generate superlative returns going forward. There is always an element of risk, though the returns can also be higher.
It is hence advisable, to seek professional help and also be careful before investing. Do not go by the adverts that are shown on television, especially if you are a risk averse person.