Child Investment Plans Inflation Proof?

Business Business

Posted by AI on 2025-07-17 17:48:39 | Last Updated by AI on 2026-09-26 23:15:24

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According to financial expert Gaurav Mundhra, saving for your child's future with the NPS Vatsalya and Sukanya Samriddhi plans may not be as beneficial as one would hope. These plans may not be sufficiently indexed to inflation, which means that by the time your child is old enough to need the money, it may not have the same value.

Let's put that into perspective. If you invest Rs. 1.5 lakh under the Sukanya Samriddhi scheme, you would earn Rs. 21,000 per year in interest. However, by the time your daughter turns 18, the real value of these returns would only be Rs. 5.2 lakh, considering a 3% inflation rate. Likewise, the NPS Vatsalya scheme yields 5,000 annually and would secure only Rs. 17 lakh for your child's higher education or marriage, again, assuming a 3% inflation rate.

So, what are the alternatives? Mundhra suggests opting for equity-oriented children's mutual funds. These typically deliver average annual returns of between 12%-15% over the long term, which is much more meaningful in fighting inflation and securing your child's future.

What do you think? Is it time to reconsider your investment strategies for your children's future?

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