5 Govt-Backed Schemes to Build Child Savings
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Sukanya Samriddhi Yojana (SSY) offers 8.2% interest this quarter — the highest rate among small savings schemes — with tax benefits on both principal and interest for parents saving for a daughter's future, launched under the Beti Bachao Beti Padhao initiative.
- NPS Vatsalya Yojana allows parents or guardians to open a retirement savings account for a minor, which automatically converts to a standard NPS Tier I account when the child turns 18, enabling early retirement compounding.
- Public Provident Fund (PPF) accounts can be opened on behalf of minors, featuring a 15-year lock-in period, tax benefits, and compounding for long-term savings growth.
- Bank fixed deposits and recurring deposits are described as the most conservative options for parents seeking capital protection while building children's savings.
- Children-focused mutual fund schemes function like regular mutual funds but are structured specifically to help parents invest for a child's future expenses including education, healthcare, hobbies, and other aspirations.
Why it matters: Parents can match each scheme to a specific goal — SSY at 8.2% for daughters' expenses, NPS Vatsalya for early retirement compounding, PPF for tax-advantaged long-term growth, or FDs for capital protection — but each option carries distinct lock-in periods, eligibility rules, and tax treatment that must be weighed against the child's timeline and the family's risk tolerance.
Ask SkimNews
