Why Fixed Deposit is the Best Investment Option for Children

In India, saving and investing for children’s education and marriage is one of the most important financial goals for most parents. Research has indicated that school fees, tuition fees and other associated expenses have risen by 150% in the last ten years. Note that a child undergoing higher education costs 18.3% of total household income in urban India. In contrast, only a small percentage of parents plan for child education, with specific investments defined for the various aspects.

The rising inflation is making future financial requirements for a child such as education, skill development, non-academic career aspirations, and marriage much more expensive. Hence, parents must plan for their children’s future needs early on and give sufficient time for these investments to grow. The earlier you can start, you can reap enormous benefits. For instance, if you start saving and investing as soon as your child is born, imagine the corpus you can accumulate when she reaches the age of 18.

Even as parents plan for their children’s future, they tend to miscalculate the cost of future financial requirement and do not choose the right investment option. 

A fixed deposit account is considered as the best way of securing your savings in a bank. Fixed deposits empower you by increasing your savings with a predefined rate of interest, and upon maturity, you can easily withdraw your investment. Also, fixed deposits bear less risk and come with guaranteed returns, thus making it an ideal investment option for many. There are several types of fixed deposits offered by multiple banks. One of the most significant types among parents is a fixed deposit scheme for children. Such an FD allows the parent/guardian to open an FD account on behalf of the child. The child will receive the earnings from an FD at the age of 18 years or when the FD reaches maturity. The guardian/parent is in charge of the account. There are many banks & NBFCs which offer the best-fixed deposit interest rates for such instances. 

Advantages of investing in a Fixed Deposit Scheme for Children:

a) Fixed deposit scheme ensures that you save up for your kid’s future without any challenges. FDs require you to invest once unlike other savings schemes which require you to make regular investments to save up.

b) Fixed deposits can be opened for kids with a minimum age of one year, thus giving the parents more time to save up for their child’s future.

c) Another advantage of a fixed deposit scheme for children is that the minimum amount required is very less. Investing in a fixed deposit for your child will ensure that your child stays financially protected in case something unfortunate should happen to you.


Financial discipline is one of the most important factors to meet your long-term financial goals, and financial planning for a child’s future is never a short term goal. Thus, you might want to find yourself a scheme which provides suitable fixed deposit rates as per your financial goals.