Money-Wise: Not just NPS Vatsalya, here are five other child investment plans in India

With the announcement of NPS Vatsalya as part of the National Pension System of India, the spotlight has been shifted to the growing need to secure children's financial future.

Indeed, NPS Vatsalya has emerged as one of the best schemes to invest for children's better future and has a fantastic projection of an annual contribution ofRs 10,000 for 18 years at an expected rate of return (RoR) of 10 per cent creating a corpus of aroundRs 2.75 crore till the time the child turns 60, which makes it very lucrative for the middle class.

NPS Vatsalya scheme is eligible for all minors and requires a minimum initial contribution ofRs 1,000 to open an account and a minimum annual contribution ofRs 1,000 in the years ahead which makes this scheme manageable for citizens from all walks of life.

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Also Read:NPS Vatsalya: All you need to know about the pension scheme for children

“Under this scheme, parents can open an account right from the child’s birth. The corpus accumulated will be illiquid till the age of 60," said Lt Col (Retd) Rochak Bakshi, Founder and CEO of True North Financial Services, while speaking to WION.

However, there are other schemes also to invest for a financially secure future for children.

5 Child Investment Plans With Good Returns

This is the saving scheme launched by the Indian government with the intention to help parents save money for the education and marriage of their daughters. The scheme has an interest rate of 7.6 per cent. Its minimum deposit limit every year is Rs 250 and the maximum is Rs 1.5 lakh.

Child Unit Linked Insurance Plans (ULIPs) are bought especially for children. These plans have five-year lock-in periods and are generally purchased for a time duration of 20 to 30 years. According to the fund selected, the money is allocated in debt and equity securities. By the time, the child reaches the age of 18, partial withdrawals are permitted. The paid premiums fall under the 80C deductions.

A systematic investment plan (SIP) for children is a monthly mutual fund investment for creating a corpus for their future requirements. The child's parents or guardians can start child SIPs with a minimum of Rs 500 per month for a period of 10 to 15 years.

Speaking about the benefits of SIPs, Bakshi said, "I feel that it will be better to invest for the child in pooled investments like mutual funds and then hand over the assets to the child on reaching the majority. These mutual funds can be aggressive and thus would have a better returns profile. At the same time, these will encourage active participation of the child in learning about Personal Finance issues."

Also Read:Money-Wise: India introduces Unified Pension Scheme. Will it be more beneficial than NPS & OPS?

Child Endowment Plans provide guaranteed returns as well as life insurance coverage. Generally, they have four payouts in which 25 per cent of the sum assured plus bonuses are transferred to the account of children after they reach the age of 18. However, the returns in such schemes are comparatively low.

Moneyback insurance plans for children are similar to endowment plans, however, they provide regular returns at periodic intervals.