Parenting is a journey filled with love, joy, and endless memories but it comes with its fair share of responsibilities. Planning for your child’s future is one of the most important—and sometimes overwhelming—tasks.
These milestones come with hefty price tags, from education to career aspirations and even their wedding. But here’s the good news: securing your child’s future doesn’t have to be stressful or complicated.
The best one-time investment plan for a newborn baby or child is the perfect way to give your child a solid financial foundation without constant contributions. Imagine investing a lump sum today and watching it grow over time, ensuring you have the funds when those significant life events arrive. Let’s dive into why a one-time investment plan could be your best choice and how it can work wonders for your child’s future.
Why a One-Time Investment Plan is a Smart Move
Life is unpredictable, and as parents, we want to be ready for whatever it brings. Whether it’s the rising cost of education or unplanned expenses, a one-time investment plan can provide the financial cushion your family needs.
The great thing about these plans is that you only need to make a one-time payment—no ongoing premiums to worry about! And since they work on the power of compounding, your investment can grow exponentially over the years.
Many of these plans also come with built-in life insurance, giving you peace of mind knowing your child’s future is secure, even if something unexpected happens to you.
A one-time investment plan helps you set a clear financial goal without the hassle of managing multiple investments. Whether you’re saving for your child’s education, their first car, or even their wedding day, this plan can ensure you’re financially prepared for all those life-defining moments.
Best Investment Options for Children in India
- Unit Linked Insurance Plans (ULIPs): Combining insurance and investment, ULIPs offer life coverage and potential returns of 4-6% annually. These low-risk plans are ideal for parents seeking a mix of protection and investment growth for their child’s future.
- Gold Bonds (Sovereign Gold Bonds – SGBs): SGBs are government-backed, offering interest along with capital appreciation linked to gold prices. A safe, digital alternative to physical gold, they also offer an annual interest rate of 2.5%, making them a reliable investment for children.
- Recurring Deposits (RDs): RDs offer steady, low-risk growth with fixed interest rates. Regular monthly deposits ensure guaranteed returns, making them an excellent way to accumulate savings for your child’s future without taking on much risk.
- Public Provident Fund (PPF): A government-backed, long-term investment with a 15-year lock-in period. Offering an 8.75% interest rate and tax benefits, PPF is an ideal option for steady, risk-free growth for a child’s future savings.
- National Savings Certificate (NSC): A secure, low-risk investment with a 5-year lock-in, NSC is perfect for saving for a child’s education. It offers tax rebates under Section 80C and guaranteed returns, making it a trustworthy option for long-term planning.
- Investments in Gold: Gold is a tried-and-true hedge against inflation, with digital options like Gold ETFs and Sovereign Gold Bonds offering liquidity and security. Gold remains a stable long-term investment for future financial needs.
Also Read: ETFs: All You Need To Know About Exchange Traded Funds - Bank Fixed Deposits (FDs): FDs are one of the safest investment options, offering fixed interest and guaranteed returns. FDs are suitable for long-term savings, with some banks offering insurance coverage, which provides a secure way to grow money for your child’s future.
- Insurance Policies for Children: Tailored policies for children provide life coverage and accumulate over time, offering a lump sum at maturity for educational or marriage expenses. These policies also deliver tax benefits, making them an attractive option for future financial planning.
- Sukanya Samriddhi Scheme (Post Office): A government initiative for girls, this scheme offers an 8.6% annual interest rate, with deposits allowed until the child turns 14. It has a 21-year maturity period, and partial withdrawals are permitted after the age of 18.
Also Read : Save Tax through Sukanya Samriddhi Yojana - Mutual Funds (for Children): Mutual funds offer flexibility through lump sum payments or SIPs. They provide high growth potential with varying risk levels, making them a great option for long-term investments aimed at securing a child’s financial future.
- Invest in Equity Mutual Funds: These funds offer high returns (12-15% annually), with options for lump sum or SIP investments. Although risky, equity mutual funds are ideal for long-term growth, making them a strong choice for parents seeking high returns for their child’s future.
The Benefits of a One-Time Investment Plan
Let’s break down why a one-time investment plan is such a game-changer for parents:
- Compounding Works in Your Favor
Think of compounding as your secret weapon. By starting early, you’re allowing your money to grow exponentially over time. If you invest in equity, debt, or balanced funds, you’ll likely see returns that outperform inflation, ensuring the actual value of your investment is protected. - Peace of Mind with Life Insurance
A one-time investment plan often includes a life insurance component, ensuring that your child’s needs are still covered if something unforeseen happens. The payout ensures their future is secured, no matter the circumstances, from school fees to everyday expenses. - Boost Your Investment Without Extra Effort
Many plans offer additional wealth boosters, meaning a portion of your investment is added every few years. Your investment grows without further contributions, giving you even more benefits. - Flexibility When You Need It
Life happens, and sometimes you need to access funds sooner than expected. Many child investment plans allow for partial withdrawals so you can access a portion of your investment for urgent expenses, like school fees or extracurricular activities. - Tax Savings
Who doesn’t love tax benefits? The premiums paid for these plans are tax-deductible under Section 80C of the Income Tax Act, and the maturity proceeds are often tax-free under Section 10(10D). So not only are you setting your child up for financial success, but you’re also saving on taxes along the way!
Start Early: The Power of Investing for Your Child
The earlier you start investing, the more your money can grow. A one-time investment plan for a newborn baby maximizes the benefit of compounding by giving you more time for your investment to grow.
Also Read: Creating Wealth By Doing SIP – Power Of Compounding
Starting early also helps you lock in lower premiums since child plans are often more affordable when the child is younger.
When you invest early, you’re also protecting your investment from inflation. As the cost of living rises, the value of your initial investment remains strong, ensuring that your child’s financial future stays on track even as prices increase.
What Makes a One-Time Investment Plan the Best Choice for Your Child
Parenting is already full-time, so why make financial planning more complicated?
A one-time investment plan simplifies the process by eliminating the need for recurring payments.
You don’t have to worry about missing premiums or policy lapses. With just one lump sum today, you can rest easy knowing your child’s financial future is secured.
These plans offer high returns over the long term, often outperforming other investment options. Plus, they come with the added benefit of peace of mind, knowing your child’s needs are covered for years.
Also Read: Safest Investment with High Returns in India
How to Choose the Best Investment Plan for Your Child’s Future
- Align Investments with Life Goals
Choose a plan that supports your child’s key life milestones, such as education or home ownership. Match the lock-in period and investment duration with these future goals to ensure the funds are available when needed. - Balance Risk and Reward
Evaluate your risk profile and expected returns before investing. Riskier options, like equities, offer potentially higher returns over the long term but come with volatility. Choose a plan that matches your comfort with market fluctuations. - Optimize Costs for Better Returns
Minimize investment fees, including fund management and premium allocation charges, to ensure a larger portion of your money works toward growing your child’s future. - Liquidity Considerations
Before locking in your investment, think about whether you’ll need quick access to funds for emergencies or education fees. Some plans offer more flexibility, allowing for withdrawals in case of contingencies. - Take Advantage of Tax Benefits
Investments that offer tax-saving benefits (like under sections 80C or 80TTA) can be an added advantage, but don’t let tax-saving be the primary reason for choosing a plan. Focus on long-term growth. - Plan for Your Child’s Financial Independence
Ensure that your child will have the option to use the funds when the investment matures, whether for higher education, buying a house, or other life goals, giving them financial independence. - Foster Financial Discipline
Regular investment plans, such as SIPs or RDs, promote financial discipline by allowing you to invest smaller amounts over time. This approach is often more manageable than committing a large lump sum and helps build consistent wealth over the long run.
Why Fintoo is Your Trusted Partner?
Choosing the right investment plan for your child is one of your most important financial decisions. That’s where Fintoo comes in. Our expert financial planners are here to guide you through the process, helping you select the best plan based on your family’s unique needs and goals.
At Fintoo, we understand that every family’s financial situation is different. Our team will work with you to define your objectives, assess your risk tolerance, and help you select the most suitable options. We focus on simplifying your financial planning, ensuring you make the best investment decisions for your child’s future.
Also read: The 50/30/20 Rule: How Can It Help You Master Financial Stability?
Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Investing using the app is the sole decision of the investor and the company or any of its communications cannot be held responsible for it.
