Best financial gift for child: PPF, Gold ETF, Sukanya Samriddhi Yojana, to Mutual Fund SIP

Best Financial Gift for Child: This festival season, you can make your children rich. Instead of splurging on physical gifts like mobile phones, other gadgets, costly clothes, trips to tourist locations, you can gift them financial products that would ensure they never run out of money in the future. We all know that materialistic gifts don't last long. Their relevance decreases with time. But the financial gift of today can become a financial backbone in life in the future. There are a number of financial products you can pick. For instance, in place of costly clothes, you can deposit the amount in a bank Fixed Deposit, which are now offering higher interest rates and guaranteed returns. In place of costly gadgets, you can put the money in a mutual fund SIP. These investments will also help you tremendously, in more than one way: 

 - First, You won't have to worry about the rising education cost when your children grow up.

 - Second, there are certain financial products like Sukanya Samriddhi Yojana and PPF that offer Income tax benefits and over 8 per cent interest currently. Remember, small investments today can turn into a big corpus in future 

Best Options

Mutual Fund SIP: Gajendra Kothari, MD & CEO, Attica Wealth Management, told Zee Business that mutual fund investments can be made in the name of minors. You need to open a bank account in the name of the minor. And, from their account, a lumpsum amount every month can be deposited in a SIP. You can also make a top-up on special occasions like Diwali, Dussehra, and Dhanteras when children get cash gifts as 'shagun' from elders in the family. Kothari said this will help the children a lot after 15-20 years. 

Term plan: Kothari suggested that you should buy a term insurance for yourself. Because the future of your kids is in your hands. You can make your child the nominee. If something bad happens tomorrow, then they will be able to get a lump sum amount, or monthly payment till they become 21 years old. 

No risk investments: Sukanya Samriddhi account can be opened in the name of the girl child. It offers tax benefits for an investment up to Rs 1.5 lakh per year and 8.5% interest at present. You can also open a PPF account in the name of your minor son or daughter and enjoy tax benefit for yourself. Both are safe options and long-term plans. 

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Not Physical Gold: Kothari doesn't believe that physical Gold can give big return in the long term. He suggested you can invest in Gold SIP, Gold ETF, or Sovereign Gold Bonds. When your children become of marriageable age, this Gold investment will help them 

Education fund: Education cost has become one of the biggest goals for the parents today. Parents want to send their children to the best universities of the world, but the rising cost becomes a headache. Kothari said you can start with equity funds which can give up to 12% interest. Over the years, this will create a corpus that can be used for the children's education. 

For near-term planning, Kothari suggested to invest in debt funds, which have less equity components. You can expect an 8-10% return. For the long-term plan, you can opt for equity funds and expect up to 12% return. Kothari suggested multi-cap funds. His favourite is  Parag Parikh Long Term Equity Fund. This is a multi-cap fund of which 65% is invested in Indian equities and 35% in the US. The fund is not very much affect by rupee-dollar fluctuations, according to Kothari. Another fund he suggested was Mirae Asset India Equity.