How to Set Up a Fixed Deposit Account for a Minor
Disclaimer: Ujjivan Small Finance Bank does not offer a dedicated FD for minors. This blog is written for generic information only.
September 27, 2024
Safeguard your child's future with Fixed Deposits (FDs). Fixed Deposits offer stable and assured returns, ensuring consistent growth. Unlike market-linked instruments like stocks or mutual funds, FD interest rates remain fixed throughout the tenure, undeterred by market fluctuations.
In this blog, we have simplified how to set up an FD for your child.
Benefits of Investing in a Fixed Deposit Plan for Your Child
Investing in minor savings plans comes with several advantages. Let's take a look at some of them:
- Financial Security: A fixed deposit plan ensures financial security for your child's future milestones, such as higher education or marriage.
- Higher Interest Rates: FDs offer higher interest rates compared to Savings Accounts. Also, the interest is calculated via the compound interest method, ensuring long-term growth. For example, if you make a fixed deposit of ₹50,000 for five years at 7.20% p.a. for your minor child, you will get ₹71,437 at maturity.
- Overdraft Facilities: During an emergency, you can opt for overdraft against your FD. The interest is charged only on the utilised amount. You can repay the amount as per your convenience, before the maturity date.
- Flexible Tenure: FDplans typically come with flexible tenure options, allowing you to choose the duration that suits your child's needs. The tenure generally ranges from 7 days to 10 years.
Setting Up a Fixed Deposit Account for a Minor
Ujjivan SFB does not offer any dedicated FD product for minors. Here's how you can open a Digital Fixed Deposit with Ujjivan SFB:
- Step 01: Enter your mobile number, PAN and Aadhaar
- Step 02: Enter Deposit details and complete the payment
- Step 03: Provide personal details
- Step 04: Complete video KYC (08:00 AM To 08:00 PM)
- Step 05: Receive FD receipt and maximize your returns!
Documents Required
To open a Digital Fixed Deposit with Ujjivan SFB, you would need the following documents:
- PAN card
- Aadhar card
Please ensure your mobile is linked to Aadhar to experience a seamless account opening journey.
Maximising Returns and Planning for Your Child's Future
When setting up a fixed deposit account for a minor, it's essential to consider long-term planning. Here are some tips to help you maximise returns and plan for their future:
- Start early: The earlier you start investing in a fixed deposit account for your child, the more time their money has to grow through compounding interest.
- Regular monitoring and reinvestment: Keep track of maturity dates and reinvest the funds to continue earning compound interest.
- Tax implications: Understand how the interest earned on your child's FD will be taxed and plan your investments accordingly.
- Opt for cumulative fixed deposits: Cumulative FDs generally offer higher interest rates as the payout at maturity is compounded annually.
- Automatic renewal: Enable automatic renewal of FDs to avoid missing out on continuous interest accumulation.
- Use Laddering strategy: Stagger the maturity dates of multiple FDs to have regular intervals of liquidity and benefit from varying interest rates over time.
By following these strategies, you can make the most of your child's fixed deposit account and ensure a secure financial future for them.
Final Thoughts
Setting up a fixed deposit account for your minor child is an excellent way to secure their financial future. Take the necessary steps to open a fixed deposit account for your child today and start building their financial security.
Looking to grow your savings? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.
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