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Planning For Education: Using Fixed Deposits To Fund Your Child’s Future


by Mahindra Finance


February 23, 2024


5 mins read

In today's competitive world, providing quality education to our children is of utmost importance. However, the rising costs of professional and international courses can pose a significant financial challenge for parents. That's where a fixed deposit for children (FDs) comes in as a reliable and strategic investment option to secure your child's future.

Fixed deposit for children: Secure your child's education

Sending a child abroad for higher education, especially in countries like the USA or UK, requires meticulous planning due to the substantial financial commitment involved. Tuition fees, accommodation expenses, and other living costs can easily amount to several crores.

Fixed deposit for children: Power your child's future education

Fixed deposits have long been regarded as a secure investment option that offers assured returns over a predetermined period. By strategically allocating funds to FDs, parents can create a financial cushion that aligns with their child's educational aspirations. Whether it is funding a domestic professional course or an international degree, the disciplined approach of FDs allows for systematic wealth accumulation.

FDs vs other investments

While there are various investment options available, a fixed deposit for children stands out due to its stability and reliability. Unlike more volatile investments like stocks or mutual funds, FDs offer a secure avenue for preserving and growing wealth.

One key advantage of FDs is the assurance of a fixed interest rate throughout the deposit tenure, providing a predictable and steady income stream. This stability shields FDs from market risks and economic downturns, ensuring that the principal amount remains secure.

A versatile solution beyond education

While an FD for children is an ideal choice for funding your child's education, it also offers flexibility for other financial goals. Whether it is planning for a dream vacation, purchasing a home, or creating an emergency fund, the money from FDs can be utilised to meet diverse financial needs.

Fixed deposit for children's education: Empowering education with FDs for children

In the pursuit of providing the best education, start a fixed deposit for your child's education. FDs with attractive interest rates offer a concrete financial strategy.

Rising school fees, medical expenses, and increasing living costs have forced many parents to save intensively. A fixed deposit child plan provides a secure savings option for building a strong foundation.

A fixed deposit scheme for children is a secure savings plan for their education

FD plans allow you to deposit money with a bank and earn interest on it. The funds grow in line with the interest rate and can be withdrawn at the end of the FD term. This makes FDs popular among risk-averse individuals who prefer secure investment instruments.

Parents can now open a fixed deposit scheme for children on behalf of their minor children to save and build a foundation for their future. These deposits provide the necessary financial push to fulfil their educational goals.

Why invest in a fixed deposit scheme for children?

There are several reasons why parents are attracted to investing in fixed deposits for their child's education:

1. Higher FD interest rates

Fixed deposits offer attractive interest rates ranging from 4% to 7%. The compounding effect results in higher total maturity amounts that can meet educational expenses effectively.

2. Flexibility in FD duration

Many FD schemes offer flexible tenure options, typically ranging from 10 years or more. Opting for longer terms allows you to benefit from compounding and ensure sufficient funds for your child's education.

3. Assured returns

FD accounts provide secured and assured returns. The maturity amount is paid as a lump sum without any deductions. This financial certainty helps parents plan their child's educational dreams.

4. Low minimum deposit amount

The minimum investment required for FDs is affordable, with some banks accepting as little as Rs 5,000. This allows parents to start saving early and gradually build the required funds for their child's educational expenses.


Planning for your child's education requires careful consideration and financial preparedness. Investing in fixed deposits can be a reliable strategy to fund their future aspirations.

Start saving early and open an FD account to secure your child's education. Let Mahindra Finance be your partner in achieving these goals, providing solutions that empower you to fulfil your child's dreams.


Q: What is the benefit of investing in a fixed deposit for my child's education?

A: Investing in a fixed deposit provides higher interest rates that can help meet the expenses of your child's education effectively. It offers flexibility in tenure, assured returns, and a low minimum deposit amount.

Q: Can I withdraw the funds from my child's FD before maturity?

A: Premature withdrawals from FD accounts are subject to specific conditions set by each bank.

Q: Are there any tax benefits associated with investing in an FD for my child's education?

A: Fixed deposits do not offer specific tax benefits for funding a child's education. However, the FD interest earned is taxable as per income tax regulations.

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