Having a baby is one of the most beautiful experiences in life. But with the joy also comes a big responsibility — planning for your child’s future. Whether it is for their education, marriage, or financial stability, starting early always gives you an edge.
The best time to start an investment plan for your child is not when they go to school, but right after birth. Yes, the sooner you begin, the more time your money gets to grow. In this guide, proper explanation is given for how to create the best investment plan for your child from day one — in simple words.
10 steps to start an investment plan for your child right after birth
- Set a clear goal
Before you invest even ₹1, know what you’re investing for. Is it for school education, higher studies, marriage, or just a financial backup?
Setting a goal helps you figure out how much money you’ll need and by when. For example, if you want ₹20 lakhs by the time your child turns 18, you’ll know how much to invest monthly. This gives your plan a clear direction.
- Open a minor account in your child’s name
Most banks and investment platforms allow you to open a minor account under the child’s name, with a parent or guardian as the manager.
This helps in two ways:
- You keep the money separate from your own spending.
- It builds a financial identity for your child early on.
You can open minor accounts for mutual funds, savings accounts, or even fixed deposits easily with just a birth certificate and guardian ID proof.
- Start with a SIP (systematic investment plan)
An SIP is a prudent way to invest small amounts per month in mutual funds. It is flexible, easy to start and just perfect for long-term goals like your child’s higher education.
Wondering, what’s the major benefit? You do not require any lump sum investble. Even ₹500 or ₹1000 a month when invested early has the potential to grow into lakhs over a span of 15–20 years. You just need to select a diversified equity mutual fund for better returns over the long run.
- Invest in Sukanya Samriddhi Yojana (for girl child)
If you have a daughter, then this is one of the best investment plans for a child.
Sukanya Samriddhi Yojana is a government scheme that offers high interest of over 8% per anum, tax benefits and safety. You can invest up to ₹1.5 lakh per year until your daughter turns 15.
The money matures when she turns 21, making it just right for higher education or marriage. It is a no-risk, long-term plan meant exclusively for girl children.
- Explore child insurance-cum-investment plans (ULIPs)
ULIPs for children blend insurance with investment. This means if something happens to you (the parent), the insurer pays future premiums and your child’s investment continues.
ULIPs usually invest in equity or debt markets, and returns depend on performance. Some well-known insurers offer dedicated child ULIPs that mature just when your child turns 18 or 21. It is a smart way to combine protection with long-term growth.
- Use a PPF (Public Provident Fund) as a safe long-term option
PPF is another great investment plan for your child’s future. It offers 7%+ interest, comes with tax benefits, and is completely safe as it is backed by the Government of India.
Even though the account is in your name, you can consider it part of your child’s future fund. The lock-in is 15 years, which perfectly matches your long-term goal. You can deposit as little as ₹500 per year and increase as your income grows.
- Avoid locking all money in traditional FDs or RDs
While fixed deposits (FDs) and recurring deposits (RDs) are safe, they offer lower returns (5–6.5%) compared to other long-term options.
Many parents park all their savings in FDs for safety — but inflation eats away its real value.
It is okay to use FDs for short-term needs (like playschool fees), but for long-term growth, mutual funds, PPF, or ULIPs work better.
- Do not forget health insurance for the child
Though not an “investment plan” in the traditional sense, buying a good health insurance plan for your child protects your finances from medical emergencies. Hospital bills can disturb your child’s education savings if not managed early.
Some family floater policies cover children from day one. Ensure your child is covered under your family’s health insurance or buy a separate child health plan early.
- Automate your investments
The best way to stick to a long-term investment plan is to automate it. Enable auto-debit for SIPs, ULIP premiums, or PPF transfers so that you never miss a contribution.
You can also set reminders for annual deposits in schemes like Sukanya Samriddhi.
When money gets deducted automatically, you do not have to think twice regarding it. Over time, it builds wealth without impacting your lifestyle a lot.
- Review the plan every year
As your child grows up, your income, expenditures and needs will even change. That is why it is very important to assess your child’s investment plan at least once every year. Check if:
- You are investing enough
- The plan is on track to meet the goal
- You need to shift to safer options as your child nears age 18
A small review annually helps avoid future shocks and keeps your child’s financial future secure.
Secure their tomorrow by starting today
Investing for your child is not about how much you invest — it is about when you start. And the best time is right after birth. By following the above mentioned steps – opening a minor account, beginning an SIP, using government schemes and safeguarding them with insurance, you can create a robust financial base.
The earlier you start, the smaller your monthly amount you need. Over the long term, these small investments grow into a major support system.
So, do not wait. Start today, and let your child’s future grow one smart rupee at a time.
Also Read: What Training Do You Need To Become An Early Childhood Educator?
