The educational expenses have increased so much that it is quite likely that you might feel a shortage of funds while raising your child. Therefore, choose the right investment schemes to build enough wealth so that it will provide a financial cushion to you during times of need.
Factors like interest rate, rate of inflation, flexibility in terms of withdrawal options, etc. should be considered before investing in an investment scheme for your child. Here are some options that can prove to be useful for protecting your child’s future:
PPF
Public Provident Fund (PPF) is preferred by most parents due to its long tenor of 15 years that sets a discipline and allows you to collect a huge corpus till maturity. It is also good for saving taxes as the investment amount and returns are both tax-free. Therefore, you can use it for collecting enough funds for the higher education or marriage of your child.
However, the government has lowered the interest rates of PPF considerably and you also cannot use it to cover your urgent fund requirements as its withdrawal policies are not flexible.
Gold investments
Most parents prefer to invest in gold especially for their girl child so that they do not have to bear additional expenses while purchasing gold for her marriage. It is a good investment option in general also as the value of gold keeps on increasing every year.
The option of Gold ETF is much better because it allows you to purchase gold online and when it reaches a value as per your expectations, you can sell it and make a profit.
However, since gold is an international commodity, its value relies on market forces and a variety of other factors. Therefore, you need to have some experience of the market conditions to earn a substantial profit by investing in gold.
Fixed deposits
Fixed deposit offers fixed returns as it does not expose your investment to market risks. Also, it provides the flexibility of choosing tenor and deposit amount as per your financial obligations and goals.
The bank FD rates are no longer lucrative and therefore, you will have to explore the high-paying FD schemes. One of the options would be to invest in a corporate FD like Bajaj Finance Child FD that is offering a lucrative FD rate of 6.85%. It also offers a loan against FD that can be used to cover an immediate expense like an overseas trip, computer course, etc. of your child.
Non-cumulative Bajaj Finance FD enables you to choose a monthly interest payout that can be used to pay for books, monthly fees, stationeries, etc. Some of the funds can be diverted in a cumulative FD that compounds your investment over a longer tenor. The multi-deposit facility from Bajaj Finance allows you to invest in several FD plans and types at once. As a result, you can use it to meet your short term fund requirements while achieving your long term financial goals to secure your child’s future.
An additional interest rate of 0.25% applies to senior citizens and if you are a non-senior then you can use the online FD form provided on its portal to get an extra 0.10% interest rate. Moreover, credit rating organizations like CRISIL and ICRA have rated it highly for being a stable and secure investment option. Therefore, it proves to be an ideal instrument to create wealth for your child.
Raising a child requires lots of effort as the educational and other expenses are quite high nowadays. Instruments like PPF and gold investments can be used for your child’s future but they do not provide the kind of flexibility you would need to cover your immediate fund requirements. In this situation, Bajaj Finance Child FD comes into play as it not only offers a high FD interest rate but also provides the option of a loan that can cover an immediate fund requirement. Moreover, it allows you to withdraw your deposits prematurely and levies a nominal charge for that. The options like multi-deposit facility and higher FD rate offered on choosing the online mode of investment make it the best saving option for ensuring your child's bright future.
