When it comes to planning an investment for your child you need to take a slightly longer time frame in mind. This could be as much as 15-20 years.
With
such high time, money should at least quadruple or else you would not gain at
all as inflation would eat into your returns.
At
the moment for child plans you need not look at only the traditional plans that
have been offered from time to time, which in the end would guarantee you only
a fixed return.
You
can also think a little out of the box, which would help you generate superior
returns. Here are a few investment options that you could consider for your
child, which are much riskier than the traditional ones
ICICI Prudential Balanced Fund
ICICI
Prudential Balanced Fund is a good bet if you are considering a child
investment plan. It is a hybrid equity mutual fund scheme which has generated a
return of 16 per cent since being launched in 1999.
This
return is way above any fixed income yielding schemes that are currently in the
market.
The
bulk of the funds of the scheme are in blue chip stocks like Infosys and HDFC
Bank. The fund also has substantial debt holdings including government
securities.
ICICI
Prudential Balanced Fund has been rated 5 star by Value Research Online. One
can invest in the scheme under the SIP plan where an amount of just Rs 1000
would be needed.
A
good option for those looking to generate money through the scheme in the long
term.
HDFC Children's Gift Fund
This
is another fund that has generated super returns since launch in 2001 and can
be considered for a good child investment plan. In fact, it has given a return
of almost 19 per cent since 2001. The last three year returns is as high as 23
per cent.
The
fund has exposure to several blue chip stocks including the State Bank of
India, Motherson Sumi, ICICI Bank, Infosys and Larsen and Toubro.
P.P.F. From
a 10-15 year perspective the fund has the ability to generate decent returns.
It's important to note that equity mutual funds are risky by nature and their
past track record does not guarantee individuals returns.
If
one is looking for more secure returns there are various other secure options
like PPF.
Sukanya Samriddhi Accounts For The Girl Child below 10 Years
If
you have a girl child, the best option would be the Sukanya Samriddhi Account.
There are plenty of reasons for the same. One is that the scheme qualifies for
tax rebate under Sec 80C of the Income Tax Act.
The
other is that the interest income is also exempt from tax.
The
current rate of interest on the scheme is 9.1 per cent. This is likely to be
revised every year. At the moment the current interest rate of 9.1% is pretty
decent and is better than that offered by most banks.
For
more details on the Sukanya Samriddhi Scheme you can click here
