When a baby is born, we start thinking about their future. People spend a lot of money on their children’s education.
But if you begin investing when your child is born, you can save a significant amount in 15 years and provide them with a better education.
Learn about two investment options where investing just Rs 5000 per month can lead to substantial returns through compounding interest in a few years.
Public Provident Fund (PPF)
PPF is a simple investment scheme available to all Indians. You can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh per year in PPF.
This scheme comes with a government guarantee, meaning you’ll receive guaranteed returns on your investment. Currently, PPF offers a 7.1 percent interest rate.
If you invest Rs 5000 per month, you’ll have invested Rs 60,000 in a year. PPF has a 15-year duration, so in total, you’ll invest Rs 9 lakh over this period.
At a 7.1 percent interest rate, you’ll earn Rs 7,27,284 as interest on PPF. At maturity, you’ll receive a total of Rs 16,27,284, including the invested amount and interest. This sum can be beneficial for your child’s future.
Systematic Investment Plan (SIP)
For those willing to take some risk, mutual funds through SIP can be an option. SIP is market-linked, so returns are not guaranteed.
However, experts suggest that, on average, a return of 12 percent can be achieved through SIP in the long run.
Even with a Rs 5000 monthly investment, the average calculation shows that in 15 years, you would have invested Rs 9 lakh, with an interest of Rs 16,22,880.
After 15 years, the total amount, including your investment and interest, would be Rs 25,22,880, which can be very useful for your child’s future.