Child Benefit Plans

Child benefit plans are specialized mutual fund schemes that aim to help parents save and invest money for their children’s future needs, such as education, marriage, or other financial goals. These plans typically have a long-term investment horizon and are designed to generate higher returns than traditional savings accounts or fixed deposits. Child benefit plans are usually open-ended schemes that allow investors to invest small amounts regularly through systematic investment plans (SIPs).

Child benefit plans invest in a mix of equity and debt securities, depending on the investment objective and risk profile of the scheme. Equity investments are made in high-quality companies with strong fundamentals, while debt investments are made in fixed income securities such as government bonds, corporate bonds, and money market instruments. The allocation between equity and debt is determined by the fund manager based on market conditions and the investment strategy of the scheme. Child benefit plans offer several benefits to investors, such as tax benefits, flexibility, and goal-oriented investing. These plans are eligible for tax benefits under Section 80C of the Income Tax Act, which allows investors to claim a deduction of up to Rs. 1.5 lakh in a financial year. Moreover, child benefit plans offer flexibility in terms of investment amount, frequency, and duration. Investors can also set specific financial goals for their children and invest in schemes that align with those goals. Overall, child benefit plans are an excellent investment option for parents who want to secure their children’s future financial needs.

Child benefit plans are debt oriented funds, with very little component invested into equities. The objective of these schemes is that of capital protection and steady appreciation of wealth as well. Parents invest in these schemes with a 5 – 15 year horizon so that they have adequate money when their children need it for meeting expenses related to higher education.

Examples of Child Benefit Plans