First-time parents naturally want the best for their little bundle of joy, which most definitely includes long-term financial well-being. We bring for you in this blog top 10 investment options available for new parents in India. Be it their education, marriage, or any other dream you want to see them fulfill in their future, this shall arm you with knowledge and insight for making an informed investment decision for their financial planning. Take this journey with us to build a secured, prosperous future for your little bundle.
1. Public Provident Fund (PPF)
The Public Provident Fund is a long-term investment scheme with a lock-in period of 15 years and comes with the backing of the government. The returns are tax-free in nature and hence attract a lot of risk-averse investors. PPF is very suitable for building a good amount of corpus for your child’s future education or marriage. It happens to be one of the most excellent tax-saving tools under Section 80C of the IT Act, ensuring it is most favorable to parents looking for tax benefits while planning their children’s future financially. PPF offers a fixed return that ensures safety in lieu of the turbulent equity markets.
2. Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana is a scheme for the girl child with high interest rates and tax benefits. Since this scheme provides tenure until the girl turns 21 years, it’s a secure investment that aids parents in saving for the higher education and marriage of their daughter, hence securing her future financially. SSY is also known as one of the best investment alternatives for the parents who want to safeguard their girl child’s future with tax benefits by investing under Section 80C. SSY presents an absolute interest rate, thus protecting investment from the volatility of the stock market.
3. Stock Market
One can take the chance of investing in the stock market, through which one is able to buy and sell portions of shares in the open market. It is considered at-risk and high-return investing. A parent can invest directly into equity or can diversify through mutual funds and SIPs. While the stock market remains volatile in the short run, normally it pays huge returns over a long period of time. It simply means investing your money in the stock market and being patient enough to see the tides of the market, which requires rigorous research into the company, risks assessment, and a long-term perspective toward financial goal achievement.
4. Mutual Funds and Systematic Investment Plan (SIP)
Mutual funds pool the money of many different investors to invest in diversified portfolios managed by professionals. They have the potential to offer high returns, flexibility, and liquidity. According to the risk appetite and financial goals, parents could opt for equity, debt, or hybrid funds; thus, they become versatile options for investments. Furthermore, it is said that mutual funds are considered to be one of the best avenues for long-term wealth creation due to the high return and diversification benefits that have attracted the attention of investors. On the other hand, SIP or mutual fund investing presupposes systematic investment in the scheme, whereby a fixed amount is invested at regular periods in a mutual fund. The discipline and long-term wealth accumulation virtues are inculcated through these. They are especially helpful in volatile conditions in the equity market since investors can take advantage of rupee cost averaging.
5. National Savings Certificate (NSC)
The National Savings Certificate is a fixed-income investment scheme that comes with a maturity period of 5 years and is supported by the Indian government. It guarantees returns with tax benefits under Section 80C. NSC is a safe investment option for those parents who have medium-term goals for the child. Besides, due to its safety aspect, assured returns, and tax-saving features, NSC is also being preferred by parents as an avenue of secure investment. It offers a certain degree of stability during times of market volatility, which goes on to protect one’s investments from fluctuations in the stock market.
6. Fixed Deposits (FDs)
Fixed Deposits (FDs) are bank deposits with fixed tenures and guaranteed interest rates. They offer safety of capital and moderate returns. FDs are a reliable investment option for risk-averse parents who seek assured returns and wish to preserve their capital while saving for their child’s future needs. Moreover, FDs are widely regarded as a secure investment option for parents looking to safeguard their child’s financial future while enjoying the convenience and stability offered by bank deposits. FDs provide a stable investment avenue unaffected by stock market movements, ensuring consistent returns.
7. Gold Investments
It consists of physical gold, Gold ETFs, and Sovereign Gold Bonds. Gold here works just like an inflation hedge and is very liquid. In India, it is one of the more traditional forms of investment, especially for long-term wealth preservation. Parents can also diversify their portfolio into gold investments to secure the future of their children. Increasingly, gold investments are also being seen by parents as an effective hedge against inflation and a safe haven in times of economic turbulence—a must-have in every diversified investment portfolio. Gold investments sail through any stock market downturns, preserving wealth and offering liquidity.
8. Unit Linked Insurance Plans (ULIPs)
Unit Linked Insurance Plans combine life insurance with investment in equity and debt funds. They offer the potential for high returns along with insurance cover and tax benefits. ULIPs are appropriate for long-term financial goals or protection and growth opportunities to secure your child’s financial future. Besides, ULIPs have been gaining popularity with parents as a comprehensive investment-cum-insurance solution that offers dual benefits of wealth creation and risk protection, thus quite attractive for securing the future of one’s child. Thus, ULIPs stabilize the volatility of the stock market and hence have insured growth potential.
9. Recurring Deposits (RDs)
Recurring Deposits involve regular monthly deposits to a bank for a fixed tenure. They give guaranteed returns and are safe investments. RDs are ideal for parents with a propensity to adopt a disciplined approach to savings that come with assured returns, helping them in systematically saving for the future expenses and financing goals of their ward. More importantly, as RD accounts are a low-risk and hassle-free route for parents to build up their savings over some time, they are sure to be very popular among them in providing financial security in meeting the needs of their child in the future. RDs offer stability amidst fluctuating stock markets and give consistent return for disciplined savings.
10. Finance Education.
Long-term fulfillment for our loved ones will not be secured simply by leaving behind various assets. As parents, it’s important that we empower our children with the life skills to be able to handle such assets and eventually lead successful and independent lives. These include the skill of financial literacy. Here are many ways to teach kids about finances.
– Build Responsible Habits.
– Encourage Independence.
– Involve Them in Family Spending.
– Set Savings Goals.
– Create a Budget for Your Family.
