GIRL POWER
Femina|January 2021
A daughter’s education and marriage are key financial goals for most Indian parents. Babar Zaidi finds the best instruments that can help you reach them
Babar Zaidi

COVID-19 was raging and several parts of Mumbai were locked down, but that didn’t stop Sarika Sinha from giving her daughter the best gift a parent can. Last month, the Mumbai-based finance professional opened a Sukanya Samriddhi Yojana account for her daughter Praashvi. “I will put the maximum ₹1.5 lakh in this scheme every year,” she beams. Financial planners say the Sukanya scheme is a good option for parents with daughters below 10 years. “The scheme offers assured returns, so there is a predictable compounding of the investment every year,” says Prableen Bajpai, founder and managing partner, FinFix Research and Analytics. “What’s more, the interest is fully tax free. Parents should not let go of this opportunity,” she adds.

While the Sukanya scheme is indeed a good investment, the problem is that it might not be enough to save for the education that Sinha has in mind for her daughter. The scheme has an annual investment ceiling of ₹1.5 lakh. Also, it offers 7.6 per cent interest right now, though this could change in the future. Assuming an interest rate of 7.5 per cent per annum, Sinha’s investments would grow to about ₹46.5 lakhs when two-year-old Praashvi is ready for college after 16 years. That’s a sizeable sum, but will fall well short of the targeted ₹1.1 crore. Education inflation in India is very high, with costs escalating almost nine to 10 per cent every year. The ₹25 lakh needed for college today would have risen to nearly ₹1.1 crore by 2036. To augment Praashvi’s college kitty, Sinha and her husband have started SIPs in two equity funds and a hybrid scheme. They are putting ₹12,500 a month into these three schemes. “We have assumed conservative compounded returns of 10 per cent over the next 16 years,” she says. The investments would grow to around ₹60 lakh in 16 years, complementing the ₹46.5 lakh corpus of the Sukanya scheme.

If you are also saving for your daughter’s education, use a mix of equity funds and debt instruments to reach your goal.

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