Having a baby is one of the most beautiful feelings in the world, and most of the people look forward to it. Raising a child is an exceptional experience, but it comes with many challenges and most of them are financial. The best way to avoid financial constraints while bringing up your child is to plan your finances well.
The proper financial planning of the future of a newborn child also makes sure to take care of the child financially even if one of the parents passes away. There are many options where the parents of a newborn can invest for the future of a child that will yield returns. These options are explained as follows:
Child Plans
Child plans are long-term investment plans bought for a newborn child. These plans usually are of a pre-specified duration or lock-in period. The maturity period should align with the milestones in the child’s life that will require a handsome amount from your savings, like his/her higher education.
If you have a girl child, the Indian government offers various schemes like the Sukanya Samridhi Yojana that yield attractive returns. These schemes are very useful for planning out the future of a girl child and ensuring financial support in major milestones of her life.
Gold ETF
The gold ETFs are the units of mutual funds that are equivalent to one gram each. These instruments are popularly called paper gold and can easily be bought and sold same as mutual funds with the help of a demat account.
Public Provident Fund (PPF)
The Public Provident Funds (PPF) are long-term investment tools that are very popular among Indian investors. This investment option is offered by both banks and the post office. The maturity period of PPF is 15 years which is expandable till 5 years. The partial withdrawals are allowed after a period of 7 years is completed since the inception of the scheme.
Stocks
The investment in stock can be made by the parents that have a backup plan for their child’s expenses. This is so as investing in stocks is a risky option. They can provide high returns in the short run as well as the long run. They have a high yielding capacity, but the returns are subjected to market risks. These investments can prove to be risky in the long run, and therefore there is a need for a backup plan.
Fixed Deposits
When it comes to investments and financial planning, no investments provide better interest than fixed deposits without any risks. Fixed deposits offer you a fixed return throughout the tenor and at high-interest rates. There are many banks and NBFCs that offer fixed deposits (FD) at attractive interest rates.
One of the best FD interest rates in the market is provided by Bajaj Finance which is 8.75% to 9.10 %. The company also has highest credit rating by both ICRA and CRISIL and is therefore completely reliable option to invest in.
You can select an option among the above as per your short-term and long-term goals for your newborn baby. The selection of long-term options can be made if you want to invest for the higher education of the child or a similar milestone well in advance. For other short-term and medium-term goals, you should opt for Fixed Deposits that can offer you good returns without risks.