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Every parent wants to give their child a good education and a strong financial start in life. But how to make this possible? In India, many child investment plans are now available that offer a mix of safety, + growth, + tax benefits. The right investment depends on how much risk you are comfortable with and how long you can stay invested.
Need help? In this article, let’s check out four child investment plans that Indian parents may consider in 2026.
4 Child Investment Plans in India You May Consider in 2026
When investing in a child investment plan, your target is never earning “short-term returns”.
Instead, it is about staying invested for a long period. This gives your money enough time to grow and build a sizeable corpus for your child’s future needs.
Below are four child investment plans in India that allow you to accumulate funds gradually and use them when your child reaches the required age:
1. NPS Vatsalaya
NPS Vatsalya is a long-term savings and pension scheme created only for minors (children below 18 years). This child investment plan is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and was announced in the Union Budget 2024–25.
The primary purpose? It lets parents or guardians start saving early for a child’s financial security. This scheme also gives an option to continue the investment under the National Pension System (NPS) after the child becomes an adult.
For more clarity, let’s check out some primary features of this financial product:
| Feature | Details |
|---|---|
| Eligibility | Open to all Indian citizens below 18 years of age [including NRI (Non-resident Indians) and OCI (Overseas Citizens of India) children] |
| Beneficiary | The minor child is the sole beneficiary |
| Account Ownership | The account is opened in the name of the minor |
| Account Operation | Managed by a parent or legal guardian until the child turns 18 |
| Minimum Contribution | ₹250 as an initial contribution and then ₹250 per year |
| Maximum Contribution | No upper limit on contributions |
| Third-Party Contributions | Relatives and friends can also contribute as gifts |
| Partial Withdrawal Start | Allowed after completion of 3 years from account opening |
| Partial Withdrawal Limit | Up to 25% of the child’s own contributions (returns excluded) |
| Exit – Lump Sum Limit | Up to 80% of the total corpus |
| Exit – Annuity Requirement | Minimum 20% must be used to purchase an annuity |
| Full Withdrawal Condition | Allowed if the total corpus is ₹8 lakh or less |
2. Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme launched in 2015 under the Beti Bachao, Beti Padhao initiative. This child-saving plan allows parents or legal guardians to build a long-term savings corpus for a girl child.
Be aware that an SSY account can be opened at authorised banks or India Post offices. The interest rate offered by this scheme is reset quarterly. Currently, as of January 20, 2025, you can earn 8.20% p.a. For more clarity, let’s check out some primary features of this scheme:
| Feature | Details |
|---|---|
| Objective | Long-term savings for the education and marriage of a girl child |
| Launch Year | 2015 |
| Eligible Child | Girl child below 10 years of age |
| Number of Accounts | Only one account per girl child |
| Who Can Open the Account | Parent or legal guardian |
| Where to Open | Post offices and authorised banks |
| Minimum Deposit | ₹250 per financial year |
| Maximum Deposit | ₹1.5 lakh per financial year |
| Deposit Tenure | Deposits required for 15 years from account opening |
| Account Maturity | 21 years from the date of account opening |
| Partial Withdrawal | Allowed for higher education expenses of the account holder |
| Premature Closure | Allowed in case of marriage after the girl attains 18 years |
| Tax Benefit on Deposit | Eligible for deduction under Section 80C |
| Tax on Interest | Interest earned is tax-free under Section 10, Income Tax Act, 1961 |
3. Unit Linked Insurance Plan (ULIP)
A ULIP (Unit Linked Insurance Plan) is a financial product that combines life insurance and investment in one policy. When you pay a premium:
- One part is used to provide life cover
and
- The remaining part is invested in market-linked funds (such as equity funds, debt funds, or balanced funds).
Now, if the policyholder dies during the policy term, the nominee (for example, the child) receives the insurance benefit. Whereas, if the policy continues till maturity, the accumulated investment value is paid.
Note that ULIPs have a mandatory lock-in of 5 years. After this lock-in, withdrawals are usually permitted (subject to policy conditions). For a better understanding, let’s check out its several features:
A) Investment Options in a ULIP
ULIPs allow you to choose where your money is invested. Usually, you get these three options:
| Equity Funds | Debt Funds | Balanced Funds |
|---|---|---|
| Higher growth potential + higher risk | Lower risk + stable returns (could be lower than equity funds) | Mix of equity and debt |
Note that you can also switch between these funds during the policy term.
B) Charges in a ULIP
ULIPs involve multiple charges, such as:
- Mortality charges (for life cover)
- Policy administration charges
- Fund management charges
These charges impact returns, so it is important to compare policies and understand total costs before investing.
C) Tax Treatment of ULIPs
Premiums paid qualify for a deduction under Section 80C (up to ₹1.5 lakh per financial year). However, this benefit can be realised only when you file your Income Tax Return (ITR) under the old regime.
Furthermore, maturity proceeds are tax-free only if the total annual premium across eligible ULIPs does not exceed ₹2.5 lakh. This rule applies to ULIPs issued after February 1, 2021.
4. Long-Term Bonds
A bond is a loan you give to an issuer such as a government authority, public sector company, or private company. In return, the issuer pays you interest at a predetermined rate and returns the principal amount at maturity.
Okay, but how can bonds work as a child-saving plan? You can opt for the “cumulative option” at the time of investment. Now, the bond does not pay regular interest (monthly or annually). Instead, the interest is:
- Re-invested automatically
and
- Paid along with the principal at maturity
As a result, interest compounds and a larger lump sum may be available at maturity. In the next sections, let’s understand the role of credit ratings and the risk profile of bonds.
A) The Role of Credit Ratings (AAA / AA)
Credit rating agencies in India (such as CRISIL, ICRA, India Ratings, and more) assign credit ratings to every bond issue. These ratings range from “AAA to D” and indicate the issuer’s ability to repay the loan. Usually, AAA-rated bonds carry the highest level of safety along with minimal default risk.
It is worth mentioning that lower-rated bonds may offer comparatively higher returns but also carry a higher risk of default.
B) Returns + Risk Profile
The returns generated by bonds are usually lower than equities. They depend on:
- Interest rate at the time of purchase
- Credit quality of the issuer
- Tenure of the bond
Since bonds are a fixed-income product, adding them to your equity portfolio might reduce volatility and protect capital.
In Summary, NPS Vatsalaya, SSY, ULIPs, and Bonds May Be Considered as Child Investment Plans in 2026!
So now you know about some child investment plans in India. In 2026, if you are looking to start investing for your child, you may invest in:
- NPS Vatsalya
- Sukanya Samriddhi Yojana (SSY)
- ULIPs
- Long-term bonds
Each option serves a different purpose and suits different needs. You may choose among these options based on your risk appetite, time horizon, and return expectations.
If you are exploring bonds, you may visit the GoldenPi platform. Here, you can find multiple bond series along with important information, such as the bond issuer’s name, credit rating, maturity, yield, and more.
Child Investment Plans FAQs
1. What is the latest tax treatment of bonds?
Interest earned on bonds is taxable and must be included in your total income under the head “Income from Other Sources”. Additionally, capital gains tax may apply if the bonds are sold before maturity.
2. Who can open an NPS Vatsalya account in 2026?
The scheme is open to all Indian citizens below 18 years, including NRI and OCI children. The account is opened in the child’s name and is managed by a parent or legal guardian until the child turns 18.
3. Are premature withdrawals allowed from the NPS Vatsalaya scheme?
Yes, withdrawal is allowed after 3 years from the account opening date. This can be done up to 25% of the child’s own contributions (returns earned are not included). Furthermore, withdrawal is allowed only for education, medical treatment, and specified disabilities.
4. When does the Sukanya Samriddhi Yojana (SSY) mature?
An SSY account matures after 21 years from the date of account opening (regardless of the child’s age at that time).
5. Can I sell my bonds in the secondary market?
Yes, most listed bonds can be sold in the secondary market before maturity. However, it is subject to market liquidity and prevailing prices.
Disclaimer:
This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.
Bonds or non-convertible debentures (NCDs) are regulated by the Securities and Exchange Board of India and other government authorities. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.
