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Savings & Investment Options for your Child’s Future

Raising a kid is not a child’s game. In today’s age, it has become further difficult. The cost of raising a kid has skyrocketed in the last few years. The trend is likely to continue. While in the past years, affordable government education was available, quality higher education has become extremely expensive.

Hence, it has become extremely important to plan and save for child’s education and marriage. Here are some of the saving and investment solutions that play an integral role while planning for your child’s future.  

Savings Account:

When you have a child, many occasions are likely to come up that may require immediate cash. Paying fees for extra classes, transportation cost can be some of the scenarios that may call for liquid cash.

Savings Account can easily help you to manage these day-to-day expenses. While you don’t have to open a separate savings account, you may need to have a rough idea of these costs so that you can figure out the average balance that you should keep in your savings account every month.

Also, a savings account can help to save money for outflows that are likely to take place in the next month.

After fixed deposits or term deposits created for your child’s goals mature, you can park the cash in the savings account until the requirement of the funds come up.

Recurring Deposit:

Recurring Deposits (RD) are one of the easiest and simplest saving options. It is best suited to fulfil your children’s short term financial goals ranging anywhere between 6 months to 2 years. RDs offer a fixed rate of interest which ensures capital safety and guaranteed rate of interest.

To know the amount of money that you need to save every month in a recurring deposit, calculate the total amount that you need to save and then divide it by the total number of months available.

Fixed Deposit:

After the birth of your children, you may receive cash as gifts from your relatives and friends. By keeping the cash in the wallet, there is a high probability of the cash being used up for the day to day purchases. Hence, the right way to go ahead would be to stash away the cash in a fixed deposit.

Also, there may be many opportunities where you may land with a lump sum amount in the form of bonus etc. In this scenario, you can park some of the amount (if not the entire amount) for your child’s goal. Choose the maturity period so that it matures around the period of your children’s goals.

FDs are also good investment options for short term to medium-term goals.

Sukanya Samriddhi Yojana(SSY)

Sukanya Samriddhi Yojana, a small savings scheme backed by the government of India meant for saving towards education and marriage of the girl child. You can open the account after the birth of your girl child. SSY gives an attractive interest rate along with tax benefits. Individuals can invest up to Rs.1.5 lakh per financial year to get tax benefits under Section 80C.

Mutual funds:

For long term children’s financial goals such as higher education or marriage, parents can opt to invest in equity mutual funds. Equity mutual funds are better investment options for goals that are at least five to seven years away as equity as an asset class performs better than other asset classes in the long term.

Systematic Investment Plan (SIP) is an investment facility provided by different mutual funds. SIP is similar to recurring deposits as investors can invest a certain amount of money every month. It makes it easier for salaried individuals to plan for their child’s future. To know the SIP amount, you can use online SIP calculators and add the current value of the goals, time horizon, add the expected average rate of returns along with the rate of inflation.  

Investors can increase the SIP amount yearly and you can also add one-time investments as well. This will help investors to help to achieve their goals faster.


Planning for your child’s future will be easy if you start early. Even if you don’t have a kid yet, and you want to be a parent someday, saving for your kid’s future at the earliest will be relatively easier than planning for it in the last moment. Savings account, recurring account, fixed deposits, SSY and mutual funds are some of the investment options that can help you to plan for your kid’s future.   


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