Best Child Investment Plans to Invest in 2024

child investment plans

There’s an unmatched joy in gifting your child a promise – a promise of a secure tomorrow. But navigating the maze of child investment plans in India isn’t always straightforward.

  • You might wonder, what’s the best investment plan for a child?
  • Or, is there an optimal one-time investment plan suited to your needs?
  • Perhaps you’re particularly keen on finding the best investment plan for a girl child in India. 

With the rising costs of education, healthcare, and lifestyle in India—it’s essential to start your child investment plans as early as possible. Making the right decision, however, requires understanding, guidance, and awareness.

In this blog, we’ll delve into the most promising child investment plans available in India and weigh their benefits to help you make informed choices.

Explore the One Time Investment Plan in India

10 Best Investment Plans For a Child In India

Investment Plan Key Features Risk Level Returns (Est.) Special Note
PPF (Public Provident Fund) Long-term savings, Tax benefits, Govt-backed Low 7% – 8% 15-year lock-in
Sukanya Samriddhi Yojana For girl child, Govt-backed, Tax benefits Low 7.6% Till the girl turns 21
ULIP (Unit Linked Insurance Plan) Combines insurance & investment, Market-linked returns Medium-High Variable Lock-in for 5 years
Conservative Fund Mix of equity & debt, Moderately aggressive Medium Variable Suitable for medium-term goals
Debt Funds Invests in fixed-income instruments Low-Medium 5% – 7% Suitable for short-term goals
Fixed Deposits Bank deposits, Safe, Fixed interest Low 5% – 7% Various tenure options
SIP (Systematic Investment Plan) Periodic investments, Diversified portfolios Variable Variable Depends on the chosen mutual fund
Aditya Birla Sun Life Child Plans Insurance & Investment, Maturity benefits Medium-High Min- Rs.1,00,000 Max- No upper limit Premium depends on the chosen sum assured amount
Aegon Life Child Plans Life cover, Market-linked returns, Maturity benefits Medium-High Absolute returns: 22.9%

But varies depending on the tenure.

Annual mode- Rs.20,000 p.a

Other modes- Rs.30,000 p.a

Bajaj Allianz Child Plans Dual benefits of savings & protection, Flexible payment options Medium-High 10 times the annualised premium Offers premium waiver

Note: The returns mentioned in the table are estimated and are subject to change based on market conditions. This blog is for informational purposes only and does not intend to provide any tips or advice. Readers are advised to conduct their own due diligence before making any investment decisions.

1. PPF

The Public Provident Fund (PPF), established in 1968 by the National Saving Organisation, serves as a beacon for secure and rewarding investments. What makes PPF a standout option is its accessibility to both adults and minors. When opening an account for a minor, a guardian manages it until the child attains the age of 18, ensuring that the journey of savings starts from the very early years of life.

Plan Name: PPF Account for Minors

Entry Age: No specific age restriction; even infants can have a PPF account.

Maturity Age: 15 years

Minimum Annualised Premium: The account can be initiated with as low as ₹100 with a minimum investment of ₹500 annually. 

Sum Assured: While there isn’t a fixed sum assured like traditional insurance plans, the contribution limit per fiscal year is capped at Rs. 1.5 lakh for a family’s combined PPF accounts.

2. Sukanya Samriddhi Yojana

A part of the ‘Beti Bachao, Beti Padhao’ initiative, the Sukanya Samriddhi Yojana is a savings scheme dedicated to the financial security of the girl child in India. Introduced by the Government of India, this scheme aims to build a fund for the higher education and future needs of girls.

Plan Name: Sukanya Samriddhi Yojana (SSY)

Entry Age: Below 10 years for the girl child

Maturity Age: 21 years from the date of account opening

Minimum Annualised Premium: ₹250

Sum Assured: Not fixed; depends on the contribution and the prevailing interest rate. Annual rates have been as high as 9.2% p.a. in past years, making it a lucrative investment.

3. ULIP (Unit Linked Insurance Plan)

ULIPs offer a dual benefit: a safety net through life insurance and a chance for market-linked growth. While they might not be the top pick for many, they cater perfectly to conservative investors. With returns hovering between 4% to 6% annually, they provide a modest but stable growth.

The maturity age, sum assured, benefits, etc., depends on the plan you choose.

For example, the HDFC Life Sanchay Par offers both insurance coverage and the opportunity to invest in market-linked instruments such as equity and debt. Additionally, it offers features like the waiver of premium rider, which ensures that the policy remains active even if the parent cannot pay future premiums due to unforeseen circumstances. On maturity, the child will receive the fund value, aiding in their higher education expenses.

4. Conservative Fund

Conservative funds emphasise capital preservation by investing in less volatile assets like fixed-income securities. Designed for low-risk investors, this conservative fund balances debt and equity, ensuring both safety and moderate growth.

An entry age as early as one year allows for longer capital appreciation, with maturity at 18. Starting with a minimum annual premium of INR 10,000, it offers a sum assured of INR 1,50,000.

Entry Age: 1 year

Maturity Age: 18 years

Minimum Annualised Premium: INR 10,000

Sum Assured: INR 1,50,000

5. Debt funds

Debt funds are a dependable investment for your child’s financial future. Offering a mix of stability with potential returns, these funds are designed for the long haul. Focused on debt securities, they provide a shield against market volatility, ensuring the capital remains relatively secure. Some popular plans include:

Plan Name Return Since Inception Expense Ratio
SBI Magnum Children’s Benefit Fund (G) 11.7% 1.20%
HDFC Children’s Gift Fund 15.8% 1.93%
Axis Children’s Gift No Lock-in Fund (G) 9.30% 2.42%
ICICI Prudential Child Care Fund Gift Plan 14.9% 2.40%
Aditya Birla Sun Life Bal Bhavishya Yojna Savings Plan 6.8% 2.58%

6. Fixed deposits

Fixed deposits (FDs) are among the safest ways to grow savings in a bank. They offer a fixed interest rate and mature at a predetermined time, making them low-risk with assured returns. Especially popular among parents, FD schemes designed for children enable a guardian or parent to initiate the investment on the child’s behalf.

There are diverse FD plans for children, including:

  • PNB Balika Shiksha Scheme: Exclusively for girl children, accessible post their 8th standard. The funds can be withdrawn when the child reaches 18.
  • Guardian Associated Scheme: Some banks offer conventional FDs for minors managed by a guardian until they attain maturity.
  • Allahabad Bank Sishu Mangal: Established in 1988, this is for children aged between 1-15. Interest accrues until maturity.

7. SIP

SIP, or Systematic Investment Plan, is an efficient and systematic approach to investing in mutual funds. A consistent saving tool, it allows you to invest periodically, thus harnessing the power of compounding and rupee cost averaging.

Here are the popular SIP Funds for child investments in India:

Fund Name AUM (Rs) Expense Ratio (%) Annual Yield (%)
ABSL Frontline Equity Fund 18897.76 Cr 1.08 14.85
Axis Long Term Equity Fund 28556.83 Cr 0.72 14.85
Parag Parikh Flexi Cap fund 8701.65 Cr 0.96 21.11
SBI Equity Hybrid Fund 38080.12 Cr 0.97 12.20
SBI Focused Equity Fund 14533.37 Cr 0.97 13.08
HDFC Midcap Opportunities Fund 25779.00 Cr 1.04 7.94 (3 Year)
Axis Small Cap Fund 4727.14 Cr 0.38 17.37 (3 Year)
HDFC Small Cap Fund 10024.44 Cr 0.95 5.88 (3 Year)

Note:

  • AUM = Assets Under Management.
  • The minimum SIP amount ranges from Rs 100 to Rs 1,000.
  • Returns and other metrics can change over time. It is recommended to review and research thoroughly before investing.

8. Aditya Birla Sun Life child plans

Aditya Birla Sun Life Insurance Company Limited offers comprehensive child insurance plans designed to secure a child’s future, covering pivotal milestones such as education and marriage.

These plans not only provide a safety net in terms of life insurance coverage for parents but also serve as an investment tool, ensuring financial growth over time. The following two highlighted plans come with distinctive features:

ABSLI Child’s Future Assured Plan

A plan tailored to safeguard significant milestones in your child’s journey. With guaranteed returns and flexibility, it ensures that pivotal events like education or marriage are always taken care of.

Minimum Annualised Premium: ₹1 lakh for 10 years

Sum Assured: ₹21.58 lakhs guaranteed benefits

ABSLI Vision Star Plan

A money-back plan crafted to support your child’s ambitions and dreams. Offering comprehensive financial protection, flexibility in premium payments, and the assurance of regular payouts.

Minimum Annualised Premium: ₹9.36 lakhs/year

Sum Assured: Get a total return of ₹92.39 lakhs

9. Aegon Life Child Plans

AEGON Life Insurance provides families with two distinct child plans: a traditional child plan and a ULIP-based plan. Each aims to address the long-term financial needs for a child’s education and other major milestones while offering peace of mind to parents in case of uncertainties.

Aegon Life EduCare Advantage Insurance Plan

This traditional money-back plan offers money back at regular intervals to cater to a child’s financial needs. It participates in company profits, providing bonuses while ensuring payouts during the last four plan years, ranging from 20% to 40% of the sum assured.

Entry Age: 20 to 60 years

Maturity Age: Up to 75 years

Minimum Annualised Premium: Depends on the cover, age, term, and PPT

Sum Assured: From Rs. 1 lakh, no upper limit

Aegon Life Rising Star Insurance Plan

On the policyholder’s demise, benefits include an immediate sum assured payout, future premium waiver, and an annual income until maturity.

Entry Age of the parent: 18 to 48 years

Entry Age of the child: 1 day to 15 years

Maturity Age: Up to 65 years

Minimum Annualised Premium: Rs. 20,000

Sum Assured: Determined based on factors like premium, term, and more, with an upper limit set at 18/10 times the annual premium.

10. Bajaj Allianz Child Plans

Bajaj Allianz Life Insurance Company offers well-structured plans designed for the financial welfare of your child. The plans, rich in features, ensure your child’s future needs are catered to, irrespective of life’s uncertainties.

Bajaj Allianz Lifelong Assure

A traditional whole-life plan ensures coverage up to the age of 100. It offers cash bonuses from the 6th year, guaranteed cash back post premium payment term, and substantial death and maturity benefits. Loan facilities and premium rebates for higher Sum Assured are additional attractions.

Entry Age: 10 – 55 years

Maturity Age: Upto 100 years

Minimum Annualised Premium: Rs.10,811

Sum Assured: Rs.1 lakh to No Limit

Bajaj Allianz Young Assure

This plan offers various maturity benefit payment options, significant death benefits, and an inbuilt Accidental Permanent Total Disability Benefit. It also provides loan facilities, flexibility in premium payment frequencies, and the choice of five additional riders for holistic coverage.

Entry Age: 18 – 50 years

Maturity Age: 28 – 60 years

Minimum Annualised Premium: Based on Guaranteed Maturity Benefit, age, term, and premium tenure

Sum Assured: 10 times the annual premium

Factors To Consider While Signing Up For Child Investment Plans In India

Investing in a child investment plan in India requires thoughtful consideration. Firstly, assess the plan’s return on investment to ensure a secure future for your child. Always check the following points:

  1. Return on Investment: Ensure good returns for a secure future.
  2. Flexibility: Ability to adjust premiums or make early withdrawals.
  3. Claim Settlement Ratio: Higher ratios mean quicker claim resolutions.
  4. Premium Waiver: Continuation of policy even if the parent passes away.
  5. Inflation Consideration: Ensure the maturity amount will be adequate in the future.
  6. Tax Implications: Some plans offer tax-free returns.
  7. Reviews and Feedback: Check the experiences of other customers.
  8. Expert Advice: Always good to seek clarity.
  9. Safety Over Returns: Prioritise the security of investment.

Securing Your Child’s Future: A Final Note

When charting the course for your child’s future, the decisions made today have lasting implications. Investing in a child plan isn’t just a financial move; it’s a gesture of love, foresight, and responsibility.

By considering factors like return on investment, flexibility, and the insurer’s credibility, you are building a safety net for the unforeseen events of life. So, leverage these best investment plans for children and provide them with a secure future.

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.


LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.

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*This is an annualized yield and is subject to the maximum FMPP tenure, which is 5 years. P2P lending is subject to high risk and may cause an entire loss of principal.
 

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