Worried about your child's education? Consider these fixed-income options
What's the story
Saving for children's education is a priority for many parents in India. With rising costs of education, it is imperative to have a well-planned strategy. Fixed-income options provide a stable and low-risk way to grow savings over time. These instruments ensure that your principal amount remains intact while offering modest returns. Here are five effective fixed-income options that Indian parents can consider for their children's educational future.
#1
Public Provident Fund (PPF)
The Public Provident Fund is a long-term investment scheme backed by the government. It has a lock-in period of 15 years, which makes it ideal for long-term goals like education. The PPF offers tax benefits under Section 80C and currently offers an interest rate of around 7.1% per annum, compounded annually. The minimum deposit is ₹500 and the maximum is ₹1.5 lakh per year.
#2
National Savings Certificate (NSC)
The National Savings Certificate is another government-backed savings scheme with a fixed tenure of five years. It is available at post offices across India and requires a minimum investment of ₹1,000 with no upper limit. The NSC currently offers an interest rate of approximately 6.8% per annum, compounded annually. It also qualifies for tax deductions under Section 80C.
#3
Fixed deposits (FDs)
Bank fixed deposits are one of the most popular investment options in India owing to their simplicity and safety. FDs offer a fixed interest rate for the term of the deposit, which usually ranges from seven days to 10 years. The interest rates vary from bank to bank but are generally between 6% and 7% per annum. FDs also offer premature withdrawal facilities, albeit with penalties.
#4
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana is specifically designed for parents of girl children aged below 10 years. This scheme provides higher interest rates compared to other savings instruments—currently around 7.6% per annum—and comes with tax benefits under Section 80C. The account can be maintained until the girl turns 21 years old or gets married after reaching 18.
Tip 1
Senior Citizens Savings Scheme (SCSS)
Although primarily aimed at senior citizens aged 60 years and above, the Senior Citizens Savings Scheme can also be availed by those who retire under a superannuation scheme after the age of 55 years. It offers quarterly interest payouts at rates higher than regular savings accounts, usually around 8.2% per annum, with a minimum investment of ₹1,000 and a maximum limit of ₹15 lakh.