Right from the birth of a child, parents plan for their future. Their schooling, higher studies, career, and marriage need money. An efficient investment plan takes dedication and effort to secure the uncertainties of life financially. The market has various available investment options based on the degree of risks associated with the project.

Market-linked plans promise high returns but are volatile. On the other hand, investments like Fixed Deposit (FD) offer guaranteed returns for your investment with a predetermined addition of FD interest rates. If you choose dependable financial providers, you will get high interest rates on FD for children.
Why invest in FD for your child?
FD is known to be one of the oldest and safest investment options in India. The FD interest rates are higher than the traditional bank savings account. Following are a few reasons for you to consider investing in a fixed deposit:
- It is a risk-free investment option with assured returns, ensuring a financially secure future for your child.
- You can renew your FD for up to 10 years. Every time you continue, the base amount increases, attracting higher FD interest rates.
- The FD interest rates are higher than all other risk-free investment options like EPF, PPF, etc.
- FD provides flexibility in choosing the tenor, type of FD, and frequency of interest payout.
- In financial emergencies, you can take out a loan against an FD, using up to 90% of the accumulated funds.
- You can make partial withdrawals if necessary by breaking the FD. However, you will need to pay a penalty for this and will not enjoy the full benefits of investing in an FD.
- The market rate fluctuations do not influence an FD’s returns, and your investments will be paid to you at maturity along with the predetermined interest rates.
- With India’s Income Tax Act, you can save taxes on FD’s income up to Rs 1.5 lakh under Section 80C.
What are the Types of FD?
You can open an FD from conventional banks and Non-Banking Financial Companies (NBFCs). There are two types of FD, they are:
Cumulative FD
In a cumulative FD, the interest is compounded quarterly or yearly. The FD interest rates are paid at maturity with this type of FD. Cumulative FDs aid in building a sizeable corpus and receive them in a lump sum.
Non-Cumulative FD
In a non-cumulative FD, the interest is paid monthly, quarterly, bi-annually, or annually, depending on your preference. Non-cumulative FDs help you earn interest payouts to fulfill regular expenses. Pensioners who seek steady income can opt for non-cumulative FDs to meet their daily requirements.
Both cumulative and non-cumulative FDs offer higher interest rates than a regular savings account. However, you can earn higher returns from a cumulative FD than a non-cumulative FD.
Features of an FD
When looking for a reliable financial provider, you will come across Bajaj Finance. It is one of the leading financial companies with CRISIL’s FAAA and ICRA’s A credit ratings. The company offers India’s other financial providers (up to 9.10%). Below mentioned are some of the features and benefits of availing FD from Bajaj Finance:
- Deposit a sum as low as Rs 25,000.
- Get guaranteed returns with fixed interest rates.
- Choose the type of FD and the frequency of interest payout.
- Flexible tenor options are available from 12 months to 60 months.
- The facility will extend the maturity date until the child needs the money.
You can compute the maturity returns easily using the online FD calculator and plan your finances accordingly.