The Schemes Which Have Better Returns Than Solution-Oriented Schemes For Children
With less than 20% returns even in the best performing schemes, it is important to understand that solution-oriented schemes will be best suited for parents with a larger time horizon.
When a parent is setting money apart to provide for their child's education, it is important to consider where they invest. With elements like inflation and changing cost of education coming into the picture, parents need to ensure that the investment primarily protects their capital while also fetching them significant returns.
There are equity schemes available that are specifically aimed to help invest into children's future. These solution-oriented schemes will have a minimum lock-in period.
With less than 20% returns even in the best-performing schemes, it is important to understand that these schemes will be best suited for parents with a larger time horizon.
"A shorter time frame might call for an equity and debt-based portfolio. A balanced portfolio with balanced advantage funds or multi-asset funds will help provide better downside protection than these specific schemes," Varun Fatehpuria, founder of Daulat Wealth Management.
For investors considering the tax treatment of the investment, there are earmarked funds that are considered under Section 80 C. One needs to make sure that the person has not maxed out on Section 80 C with investments into schemes like PPFs, Fatehpuria said.
There are certain schemes that Fatehpuria recommends that could potentially provide better returns than solution-oriented schemes.
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It is important to review these investments and understand the risk, returns and trajectory of the investment.
"During the first five years of the investment, some degree of short-term volatility can be tolerated," Himanshu Kohli, co-founder of Client Associates, said.
Parents need not compromise on the quality of investments, fund manager's experience and size of returns by limiting options to the children's schemes, according to Kohli.
There are better schemes with more balanced asset allocations that will provide both downside protection and decent returns. Periodic reviews are important, Kohli said, as he recommends rebalancing with the help of a financial planner.
These are the schemes that Kohli recommends across categories.
