Setting up a fixed deposit for your children can help you prepare a helpful future for them. With the rising cost of education, healthcare and other necessities, it is imperative to secure your child's future by starting an FD (Fixed Deposit) for them.

One of the most common ways parents set aside savings for their kids is by investing in a Fixed Deposit for minors. An FD for minors offers, predictable returns on a lump sum investment in the form of interest and the principal amount, which can be withdrawn upon maturity. You can make a fixed deposit for your child even if they are just a year old.

What are the benefits you get from investing in an FD for children?

A parent or guardian can start the FD for their children and avail the unique benefits. These benefits can be advantageous over time, giving your child's dreams to grow bigger and better.

• Predictable returns

FDs provide predetermined returns for a selected tenure. This means that parents can estimate the maturity value of the whole corpus. On turning 18 years old, the responsibilities of handling the FD shift to the child, and they get to decide what they want to do with it.

• Online investment options

With a few clicks on smartphones or computers connected to the internet, you can apply for an FD in a few minutes. This process saves valuable time and places all the options before making an informed decision.

• Low minimum deposit amount

Some financial institutions offer low minimum deposit options. This is because sometimes, when inflation is high, saving can become an issue for some people. This low minimum deposit plan can help you invest in a fixed deposit for your children during financial difficulty.

• Flexible term

You can open a fixed deposit for your child and select the term according to your preference and goals. A children's fixed deposit tenure can range from 12 to 60 months.

What is the procedure to start a fixed deposit scheme for children?

You can open an FD on behalf of your child, and they will receive the earnings from the FD when the FD reaches its maturity. The parent or guardian is simply in charge of the account. Here are the steps to start an FD for your child:

Step 1: Visit the financial institution website or branch and provide identity proof of the child and the parent/guardian responsible for maintaining the account.

Step 2: Apart from identity proof, you will also be asked for address proof, age proof and a few passport-size pictures of the child.

Step 3: After providing the required documents and the bank account details for interest remittance, the information will be verified before they start an FD for the child.

Step 4: After processing the documents, a new FD will be opened for the child, with the parent/guardian as the caretaker of the account till it matures.

Conclusion

Opening a Fixed Deposit in your child’s name can be a structured way to plan for future financial needs. With defined returns and tenure flexibility, FDs may help parents align savings with specific milestones.

However, investment decisions should be made after reviewing applicable interest rates, credit ratings, tax implications, and overall financial objectives.