Best Investment Plan for Girl Childs in 2024

Investing for a girl child’s future is a wise decision that can significantly impact her life. It provides financial security, enables her to pursue her dreams, and empowers her to make independent choices. Given the unique challenges and opportunities faced by girls, it’s essential to select investment plans that cater to their specific needs. This article explores some of the best investment options available in 2024 for girl children, considering factors such as long-term returns, risk tolerance, and tax implications. Here are some best investment options for a girl child in India.

Before we deep dive in Investment plan, we need to focus on some important consideration. Such as Importance of Investing, long-term returns, risk tolerance, and tax implications.

Understanding the Importance of Investing for Girl Children

Investing for a girl child offers numerous benefits, including:

Financial Security: It ensures that she has a stable financial foundation, regardless of future circumstances.
Educational Opportunities: It enables her to pursue higher education and professional training.
Career Advancement: It provides the resources necessary to explore different career paths and achieve her goals.
Empowerment: It fosters financial independence and confidence, empowering her to make informed decisions.

Important Factors to Consider When Choosing an Investment Plan

Before selecting an investment plan, it’s crucial to consider the following factors:

Risk Tolerance: Assess the family’s risk appetite and determine whether they are comfortable with high-risk, high-return investments or prefer low-risk, steady-growth options.
Investment Horizon: Consider the time frame for which the money will be invested. Long-term investments often have higher growth potential.
Tax Implications: Understand the tax implications of different investment options, including capital gains tax and dividend tax.
Liquidity: Determine the level of liquidity needed. Some investments, such as real estate, may have limited liquidity.
Goal Setting: Clearly define the financial goals for the girl child, such as education, marriage, or a down payment on a home.

Also Read: How to Plan Best Investment for your Child’s Education in 2024 in India

Here are some best investment options for a girl child in India.

1. Sukanya Samriddhi Yojana Scheme

The Sukanya Samriddhi Yojana is a government-backed savings scheme for parents of girls in India. The scheme was launched in 2015 to encourage parents to save for their daughter’s education and marriage. Sukanya Samriddhi Yojana (SSY) Scheme comes under the “Beti Bachao, Beti Padhao” campaign to promote welfare of the girl child. The scheme has been designed to encourage you to secure your daughter’s future by opening an account in a post office or a commercial bank.

The SSY Scheme account can be opened by a guardian for a girl child up to the age of 10. Both the guardian and the girl child must be Indian citizens. A maximum of two accounts can be opened per family, but more can be opened for twins or triplets. With a minimum deposit of Rs. 250, and subsequent deposits must be multiples of Rs 50. The maximum deposit per financial year is Rs 1,50,000. With the child’s birth certificate, and your identity proof, you can open an SSY account for your little one. The account matures after a period of 21 years from the date of opening. One withdrawal is allowed when the account holder turns 18, up to 50% of the balance from the previous financial year.

The Sukanya Samriddhi Yojana currently offers an 8% interest rate, and is beneficial in the following ways:

• The Sukanya Samriddhi Yojana comes with the Exempt, Exempt, Exempt (EEE) status under Section 80C of the Income Tax Act, making contributions to this scheme (up to Rs 1.5 lakh/year) eligible for tax deductions.
• The sum you receive after maturity is tax-free.
• You have the option to withdraw from this account for special needs such as funding higher education.
• You can transfer the SSY account from one authorised post office or bank to another.

2. Post-Office Term Deposit

Another popular investment scheme for your girl child, the Post Office Term Deposit (POTD) is offered by the Indian Postal Service. It is a fixed deposit scheme that allows you to invest your money for a fixed period at a competitive interest rate to earn returns. The amount you earn on maturity includes earned interest as well as the deposited amount.

This scheme offers you the option to choose your investment period ranging from 1 to 5 years.

Types of Post Office Term Deposits:

5-Year National Savings Certificates (NSCs):
- A popular long-term investment option.
- Offers a higher interest rate compared to other POTDs.
- Can be used for collateral purposes.
3-Year Time Deposit:
- A medium-term investment option.
- Offers a competitive interest rate.
1-Year Time Deposit:
- A short-term investment option.
- Provides a lower interest rate compared to longer-term deposits.

You also have the flexibility to operate the account jointly or solely based on your requirements. This scheme requires you to make a minimum deposit of Rs 1000 followed by deposits in multiples of Rs 100. Given below are the benefits of Post Office Term Deposit Scheme:

• It is eligible for tax deduction for 5-year term deposits under Section 80C.
• This scheme offers you a guaranteed return on your investment.
• Minors above the age of 10 are eligible for a POTD account.
• The scheme also offers you a nomination facility.
• You can transfer your account between post offices.
• Since this scheme is backed by the government, it is a safe mode of investment.

3. National Savings Certificate

National Savings Certificates (NSCs) are one of the most popular fixed-income investment instruments offered by the Indian Government. They are known for their safety, guaranteed returns, and tax benefits. NSCs are issued by the Ministry of Finance and are backed by the Government of India, making them a highly secure investment option.

This option offers you an annual fixed interest rate and ensures a regular income. Any principal you invest (up to Rs 1.5 lakhs annually) under this scheme is eligible for tax savings under Section 80C. NSC offers you the following benefits:

• You can invest as little as Rs. 100 with no upper limit.
• You can purchase an NSC from any post office after submitting the required documents.
• You can transfer the certificate between individuals or post offices without affecting the interest.
• You can use your NSC as collateral for loans.
• Any interest you earn on your NSC is compounded and reinvested annually.
• You have the option of nominating a family member, including minors to inherit your certificate.

Advantages of NSCs:

Safety and Security: Backed by the Government of India.
Guaranteed Returns: Fixed interest rate for the entire tenure.
Tax Benefits: Interest income is exempt from income tax.
Easy Accessibility: Can be purchased from post offices or treasury offices.
Minimal Documentation: Simple documentation process.

Disadvantages of NSCs:

Lower Returns Compared to Equity Investments: NSCs generally offer lower returns compared to equity investments.
Limited Liquidity: Premature withdrawal may attract penalties.
Long Maturity Period: The maturity period of 5 years may not suit short-term investment needs.

4. Unit-Linked Insurance Plan

A Unit Linked Insurance Plan, or ULIP, is an integrated plan that combines insurance with an investment, making it a highly-recommended choice of investment for your girl child. Designed to meet long-term financial goals while providing you with life insurance coverage, this financial product gives you high returns on a range of investment options.

A ULIP provides life insurance coverage, thereby ensuring financial protection for your family. This plan offers you several investment options such as balanced funds, debt funds, and equity funds- according to your financial goals and risk appetite. A ULIP has a lock-in period of 5 years and encourages long-term investment discipline. A policy holder is eligible to make partial withdrawals or surrender the policy after the lock-in period.

Following are the benefits of the unit linked insurance plan:

• Not only do ULIPs offer you dual benefits of life insurance coverage and investment opportunities, they also provide you with the flexibility of choosing your mode of investment based on your financial goals and risk appetite.
• A ULIP enables you to accrue long-term wealth and meet the financial needs of your child.
• A ULIP ensures that the nominee (child) receives a monthly payment in the event of the death of the parent.
• ULIPs also offer tax benefits on maturity proceeds and premiums.

Also Read: How to Boost Your Credit Score Using a Credit Card

5. Post-Office Recurring Deposit

The Post Office Recurring Deposit is an investment scheme that allows you to deposit a fixed amount every month for a fixed duration, at a fixed rate of interest. The scheme, offered by the Indian Postal Service, encourages regular savings while offering you a trustworthy investment option to fulfil the financial needs of your girl child. This scheme has a fixed tenure of 5 years, with an interest rate of 6.7% per annum and a minimum monthly investment of Rs 100. The Post Office Recurring Deposit Scheme does not have an upper limit on the amount you wish to deposit. You also have the flexibility to transfer the account from one post office to another.

6. CBSE Udaan Scheme

Initiated by the Central Board of Secondary Education (CBSE), the objective of the CBSE Udaan Scheme is to offer academic support to girls from economically-deprived backgrounds. The scheme enables girls to prepare for various entrance examinations and achieve new heights in their education.

This scheme offers free assistance to female students for Engineering entrance exams. It also offers several resources such as virtual classes, tutorial videos, doubt clarification, motivational sessions, and study material. The scheme offers monetary support or tablets to eligible students, clubbed with orientation sessions. As a parent, you will receive constant evaluation and feedback as well as assistance in the college application process.

7. National Scheme of Incentive for the Girls of Secondary Education

The Indian government has implemented the National Scheme of Incentive for the Girls of Secondary Education to promote female education and empowerment in the country. The government has introduced this scheme as recognition of the fact that girls must have equal access to secondary education.

Launched in 2008, the scheme aims to encourage girl child enrolment in the secondary stage and decrease the rate of female dropouts as students enrolled under this scheme are retained until class 12 or the age of 18 years. Female students belonging to the Scheduled Caste and Scheduled Tribe from Kasturba Gandhi Balika Vidyalaya (KGBVs), private schools, or government schools are eligible to apply for this scheme.

Female students receive an incentive of Rs 3000 when they enrol for class 9, in an account on their name. Girls can then withdraw the amount, along with interest, after passing their class 10 exams.

8. Balika Samridhi Yojana

Balika Samriddhi Yojana (BSY) is a government-backed scheme Introduced in 1997 in India aimed at improving the financial security and well-being of girls. It provides financial assistance to families with newborn girls, encouraging them to invest in their education and future.

Key Features of Balika Samriddhi Yojana:

Eligibility: The scheme is available to families with newborn girls who are Indian citizens.
Financial Assistance: Upon the birth of a girl child, the government provides one-time financial assistance of Rs. 1,000.
Additional Deposits: The government also encourages families to deposit an additional amount of Rs. 1,000 or more into the BSY account.
Interest Accrual: The deposited amount earns interest at a predetermined rate.
Maturity: The BSY account matures when the girl turns 18 years old.
Withdrawal: Upon maturity, the girl can withdraw the entire amount along with the accrued interest.

Benefits of Balika Samriddhi Yojana:

Financial Security: The scheme provides a financial cushion for the girl’s future.
Education Support: The funds can be used for educational expenses, such as tuition fees, books, and hostel charges.
Empowerment: It encourages parents to invest in their daughters’ education and future.
Social Change: The scheme promotes gender equality and challenges traditional gender norms.

How to Apply for Balika Samriddhi Yojana:

Visit a Post Office: Parents can visit any nearby post office to apply for the scheme.
Submit Documents: They need to submit documents such as birth certificate, proof of identity, and address proof.
Open an Account: A BSY account will be opened in the name of the girl child.

The scheme promotes equal treatment of the girl child, ensures continued education through financial assistance, offers economic empowerment and financial independence, and aids in raising girl children till they reach marriageable age.

9. Fixed Deposits (FD)

You can opt for a fixed deposit as a form of investment for your girl child. This financial instrument allows you to deposit a sum of money for a fixed period at an interest. On maturity, you will receive your principal amount along with the accrued interest.
Fixed Deposits (FDs) are a popular investment option in India. They involve depositing a lump sum amount with a bank or other financial institution for a fixed period. In return, you receive a predetermined rate of interest, which is typically higher than that of a regular savings account.

Key Features of FDs:

Fixed Interest Rate: The interest rate is set at the time of deposit and remains constant throughout the tenure.
Tenure: FDs can have tenures ranging from a few days to several years.
Guaranteed Returns: FDs offer guaranteed returns, making them a relatively safe investment option.
Early Withdrawal: While early withdrawal is generally allowed, it may incur a penalty.
Interest Payment Options: You can choose to receive interest monthly, quarterly, half-yearly, or annually.
Tax Benefits: Some FDs offer tax benefits under specific tax laws.
- Advantages: Guaranteed returns, safety.
- Considerations: Lower returns compared to equity investments, potential for erosion due to inflation.

You have the flexibility to choose the tenure of your fixed deposit. In case of a small deposit, you can also enjoy tax benefits as banks do not deduct tax up to a certain threshold.

10. Children Gift Mutual Fund

A Children Gift Mutual Fund is crafted explicitly with the aim of saving and investing for a child’s future. This product is a disciplined way of building long-term wealth to provide your girl child with financial security as she grows older. This financial instrument works on the principle of early investment and the power of compounding with time.

The Children Gift Mutual Fund permits long-term savings for higher returns. Managed by experienced professionals, this fund invests in a diverse range of assets to reduce risk of an individual investment on overall amount. As a parent or guardian, you can contribute to the fund and vary your investment based on your financial situation.

Also Read: Is a Mutual Fund Right for You? Analyze These 6 Key Parameters.

11. Mutual Funds via Systematic Investment Plan

You can choose a systematic investment plan (SIP) to invest an amount of your choice every month in mutual funds. If you opt for this method of investment for your daughter, you can invest in several SIPs simultaneously, starting with an amount as low as Rs 100. You also have the option to choose from equity, mixed funds, and debt. With advantages such as rupee cost averaging and the power of compounding, you also receive better returns in the long run.

12. Gold ETFs: A Smart Way to Invest in Gold

Gold Exchange-Traded Funds (Gold ETFs) are investment funds that track the price of physical gold. They offer a convenient and cost-effective way to invest in gold without the hassle of physically storing it. Gold ETFs are traded on stock exchanges like other ETFs, making them highly liquid and accessible to investors.

How Gold ETFs Work:

Physical Gold Backing: Gold ETFs are backed by physical gold held in secure vaults.
Units: Investors purchase units of the ETF, representing a proportionate share of the underlying gold.
Tracking: The ETF’s price closely follows the price of gold, making it a good proxy for gold investments.

Benefits of Investing in Gold ETFs:

Liquidity: Gold ETFs are highly liquid, allowing investors to buy and sell units easily on stock exchanges.
Convenience: No need to store physical gold, eliminating storage costs and risks.
Diversification: Gold can diversify an investment portfolio, providing a hedge against inflation and market volatility.
Cost-Effective: Gold ETFs typically have lower expenses compared to physical gold investments.
Tax Efficiency: Capital gains from gold ETFs may be eligible for long-term capital gains tax treatment.

Conclusion

Investing for a girl child’s future is a valuable gift that can significantly impact her life. By carefully considering factors such as risk tolerance, investment horizon, and tax implications, parents can choose the best investment options to secure her financial future and empower her to achieve her dreams. Whether it’s through government-backed schemes like SSA or market-linked investments like equity mutual funds, investing early and consistently can provide a solid foundation for a bright and prosperous future.

Disclaimer:

The information provided on this blog is for general informational purposes only and should not be considered as professional financial advice. It is important to consult with a qualified financial advisor before making any investment decisions. The content on this blog is based on information available at the time of writing and may change without notice. Past performance is not indicative of future results. The author is not responsible for any losses or damages arising from reliance on the information contained herein

Spread the love