Short answer — diversify. For long-term education savings in Sri Lanka combine: (A) a disciplined long-term growth vehicle (equity or mixed unit trusts via regular monthly investments), (B) a low‑risk core (Treasury bonds / government securities and bank term deposits) and (C) protection (life/education insurance and an emergency fund). Also use a bank “kids” account to build the habit and foreign‑currency savings if you expect overseas study. The details below will help you pick the right mix and implement it.

Why that mix

• Unit trusts (equity or balanced funds) give the best chance to beat inflation over 10+ years and are easy to invest in by SIPs. They are regulated and widely available in Sri Lanka. (cal.lk)
• Government securities (Treasury bills and Treasury bonds) are the safest rupee investments (government‑backed) and useful for the low‑risk portion of the portfolio. You can buy via banks or primary dealers. (cbsl.gov.lk)
• Bank “kids” savings accounts and children’s term plans help teach saving, provide higher rates on small balances and sometimes give gifts/benefits — good for short‑term goals and habit formation. (Examples: HNB, Amana, Nations Trust products). (hnb.net)
• Education / endowment insurance plans provide a protection layer (continue funding the child’s education if a parent dies or is disabled). They are not usually the best pure‑investment vehicle but are useful if you need guaranteed protection. (aialife.com.lk)

Tax, safety and practical notes

• Withholding tax on interest changed in 2025 (higher AIT/WHT on interest) but individuals under the tax‑free threshold may be able to avoid/deduct the withholding via a self‑declaration — check current IRD rules before placing large deposits. (adaderana.lk)
• Bank deposits are covered up to the Deposit Insurance Scheme limit — check the current insured limit and split deposits across banks if you exceed it. (Many banks show scheme details in product pages). (cdb.lk)

How to build a plan (step‑by‑step)

1. Work out the target: estimate expected education cost at the time your child needs it (current cost × (1 + education inflation)years).
2. Build an emergency fund (3–6 months) first so you won’t redeem long‑term investments in a crash.
3. Protect the plan: get adequate term life cover (sum assured big enough to pay the target) so education continues if you die or are disabled. Consider an education insurance product only as the protection overlay. (aialife.com.lk)
4. Invest by timeframe: for horizons <5 years favour deposits / short‑term government securities; for 5–15+ years allocate more to unit trusts/equities. Use monthly SIPs to smooth market timing. (cal.lk)
5. If planning for study overseas, hold a portion in a foreign currency account or invest in foreign assets to reduce currency risk. Some banks offer kids’ foreign‑currency options. (amanabank.lk)

Sample allocations (illustrative only)

• Conservative (short horizon or low risk appetite): 60% government securities / FDs, 20% money‑market/fixed‑income unit trusts, 10% children’s bank savings, 10% protection (insurance).
• Balanced (longer horizon ~7–12 years): 40% equity/balanced unit trusts, 35% government securities / fixed income, 15% bank kids savings/cash, 10% insurance.
• Growth (long horizon ≥12 years, higher risk tolerance): 60% equity unit trusts, 25% government securities, 5% bank kids savings, 10% insurance.

How to implement in Sri Lanka (practical places to look)

• Open a minor/children’s savings account at a major bank for habit‑building (examples: HNB Singithi, Amana Bank Kids, Nations Kidz). (hnb.net)
• Start a monthly SIP into a reputable unit trust (CAL, First Capital, NAMAL, etc.) for growth; check fund fees and past volatility. (cal.lk)
• Use Treasury bills/bonds as the low‑risk portion (buy through banks/primary dealers or via the CBSL auctions/secondary market). (cbsl.gov.lk)
• If you want guaranteed protection for education in case of death/disability, compare education plans from insurers (AIA, Ceylinco and others). Read product brochures carefully for charges and surrender rules. (aialife.com.lk)

Final tips

• Start early and use monthly investing — time in market matters more than trying to time the market.
• Keep records, name a nominee/guardian for minor accounts, and check account access rules for minors.
• Revisit the plan at least yearly (review allocation, fees, tax rule changes).
• For exact product suitability, current interest/coupon rates, withholding tax treatment, or to run a specific savings‑required calculation, check the product pages and the Inland Revenue Department guidance or talk to a licensed financial advisor in Sri Lanka.

If you want, I can:

• run a quick numbers example (give me child’s age, current annual education cost and target country) and show how much to save monthly under different return assumptions; or
• compare 3 specific products (one bank kids account, one unit trust and one insurer plan) if you name banks/companies you’re considering.