Investment ideas for child education you need to consider
What makes a good investment option? Many components could affect your investment decision, like liquidity, size of the investment, goal of investment, the horizon of investment, etc.
- Top 10 investment ideas for child education
Top 10 investment ideas for child education
1. Direct stock investment
Passive investing may not be everyone’s fit, as it is a risky type of asset with no certainty of profit. In addition, it is not only tricky to select the appropriate stock but also difficult to time your entry and exit.
The only bright spot is that stocks have been able to outperform all other asset classes in terms of asset price returns for a long time.
2. Equity mutual funds
Equity investors primarily invest in stocks. An equity mutual fund scheme should invest a minimum of 65% of its assets in equities and equity derivatives as per the Securities and Exchange Act of India (Sebi) Mutual Fund Rules. An investment company can be controlled directly or indirectly.
3. Debt mutual funds
Debt mutual funds are suitable for low-risk or risk-averse investors. Bond/Debt funds generally invest in fixed-income asset classes such as government bonds, corporate debt, treasury bills (T-bills), as well as other alternative investments. The returns are easy to predict, and the investment does not face much volatility.
4. National pension scheme (NPS)
The Pension Capital Market Development Authority administers the National Pension Scheme (NPS) and Long Term Investment Program for Pensioners (PFRDA).
The annual payment required to keep the NPS Tier-1 fund active has been reduced from Rs 6,000 to Rs 1,000. It consists of a combination of stocks, certificates of deposit, debt securities, liquid money, and public money, among others.
You can decide on how much risk you want to factor into your risk tolerance overall.
5. Public Provident Fund (PPF)
Since PPFs have a maturity of 15 years, the effect of compounding tax-free interest is significant, especially in later years.
In addition, since a state guarantee secures the returns and investing money, it is a safe investment. It is worth recalling that the government reviews the interest rate on the PPF every quarter.
Additional read: Mutual funds for child education
6. Fixed Deposits with the bank (FDs)
In India, a fixed deposit (FD) account is considered a better investment option than an equity or mutual fund.
Effective February 4, 2020, every depositor in the bank is covered up to a total of 5 lakh rupees for both principal and interest as per the guidelines of the Bank Protection and Credit Guarantee Corporation (DICGC).
7. Senior citizens savings plan (SCSS)
Senior Citizens’ Saving Scheme (SCSS) is a government-backed pension scheme. Senior citizens resident in India can invest a lump sum in the scheme, individually or jointly, and access regular income along with tax benefits.
Any person over 60 can apply for SCSS through a postal or commercial bank. SCSS has 5 periods which can be extended for another 3 years if the program develops.
The total capital limit is Rs 15 lakh, and many accounts can be opened. SCSS money is taxed and billed on a fixed schedule. It should be mentioned that the property interest rate is subject to frequent reviews and adjustments.
Additional read: Best sip plans for child education
8. Pradhan Mantri Vaya Vandana Yo
PMVVY is a program for older adults age 65 and over that guarantees a 7.4% annual return. The scheme provides pension contributions which can usually be paid monthly, quarterly, or annually depending on the option chosen.
The lowest pension payment is Rs 1000 per month, and the highest retirement payment is Rs 9250 every month. The plan allows a total investment of 15 lakhs. The program is valid for 10 years.
The validity of program is valid until March 31, 2023. The invested amount will be returned to the elderly person when he becomes elderly. The amount will be issued to the applicant in the event of the death of the senior citizen.
9. Real Estate
The place you live in is for personal use and would never be considered a business. If you don’t really plan to live there, the family property you are buying can serve as an investment.
The location is one of the most critical aspects in determining the value of a home, along with the rental income it can generate. Real estate investments provide profits in 2 directions: holding value and rental income. Besides, real estate investments are costly compared to other investment vehicles.
Another significant risk is obtaining adequate regulatory approvals, which has largely been resolved since the arrival of the Real Estate Investment Authority.
10. Gold investment
Owning gold in ornaments creates its own problems, including increased efficiency and lower costs. Then there are “production fees”, which typically range from 6% to 14% of the gold price.
People who want to get digital gold still have a better choice as these charges are not applicable to digital gold.
There are numerous investment options are available in the financial world. But which one suits your profile is the question.
The equity mutual fund scheme as an asset class has outperformed all the other classes and if you want to invest in digital gold or mutual funds, but do not have any idea, how to choose the fund.
Then, you can schedule a call with the EduFund advisory team.