Investment options for girl child in India: Looking for investment options to save for your daughters' future needs?
Investment options for girl child in India: Looking for investment options to save for your daughters’ future needs? There are several options – ranging from equity mutual funds to government-backed options are Sukanya Samriddhi Yojana and Public Provident Fund. All these schemes come with their own set of benefits as well as limitations. While the interest rates in schemes like SSY and PPF are set by the government, making the expected returns certain, the final returns on investments in mutual funds and gold may be much higher, or lower than expectation, depending on the period of investment and the prevailing market conditions during the investment tenure. Harsh Jain, Co-founder and COO, Groww suggests the following four options you can explore to invest for your daughter:
Equity Mutual Funds
Jain said equity mutual fund is a category of mutual funds that has long term wealth creation potential. They offer inflation-beating returns that can help you deal with the rising costs of education as well. “If your daughter still has 10-12 years before she starts college, you can start investing in a diversified equity portfolio via the SIP route to build a sizeable education corpus. You can calculate the amount you need monthly in order to reach the desired amount within the timeframe by using free tools like SIP calculators,” said Jain.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is a government-backed savings scheme that enables guardians to open a savings account for their girl child with an authorized commercial bank or India Post branch. It has a lock-in period of 15 years which ensures sufficient time to accumulate a corpus for the education or marriage-related expenses of your daughter. The scheme offers attractive interest rates around 8-8.5% and also has tax benefits under Section 80 C.
Gold is traditionally viewed as one of the most reliable investment instruments that have the potential to climb in value during a geopolitical crisis or economic instability. Jain said, “Gold is one of the most liquid paper instruments in the world, given it is easy to trade. It also helps in hedging the portfolio against inflation. While families still buy gold in the form of jewellery or coins for their daughters, you can also look to explore investing in gold in other forms too for your daughter, such as gold mutual funds and gold ETFs, which have been offering attractive returns.”
Public Provident Fund
Public provident fund is another popular long term investment option backed by a sovereign guarantee that you can use to secure your daughter’s future. Jain said PPF comes with an investment time horizon of 15 years along with offering liquidity only after completion of 6 years in the form of partial withdrawal. PPF is also one of the most tax-efficient investment options as a contribution to deposit provides tax benefit under Section 80C of the Income Tax Act. The returns offered currently is 7.9% and are tax exempt as well.