How to accumulate money for child’s higher studies?

child's higher studies

Say the child is 8 years old and the planning is for his/her graduation. Options available are DSOPF/PPF, bank FDs/RDs, Sukanya Samriddhi Yojana (for daughter only), and equity. While DSOPF/PPF are safe, tax-free and Govt backed, they earn low interest which may barely cancel out inflation over this long period of time. Bank FDs/RDs are low interest, tax-inefficient options unsuitable for such a long-term investment. SSY is tax-efficient, good rate of interest today but rates fluctuate and it has a very rigid structure. Finally, it is equity investing only which will meet the requirements for this purpose. Direct stocks are not everybody’s cup of tea – tricky, exit/entry difficult to time, volatility, etc. On the other hand, mutual funds (MFs) are very flexible, tax-efficient, high returns investments managed by experts. So it is regular SIPs in good equity MFs which would suit everybody. The amount of SIPs should be increased yearly as income increases.