Sukanya Samriddhi Yojana, PPF and Fixed Deposits, are all kinds of risk minimizing debt instruments in the financial market. One should only invest in such instruments to reduce their risk and not with a purpose of increasing their portfolio as these are long term instruments.
About Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is a recently launched small deposit scheme for the girl child. It was launched under the ‘Beti Bachao’ Campaign. It has gained a lot of popularity across the country mainly because of the tax benefits it offers.
Sukanya Samriddhi Yojana As An Investment
Sukanya Samriddhi Yojana can be seen as a good debt option by some, as it is a government scheme and all of that, but, PPF would still be considered a better option because of various reasons.
Firstly, Sukanya Samriddhi Yojana is only for girl child below 10 years. Secondly, the term of this scheme is 21 years. In laymans language it means, you are giving a loan to the government for 21 years.
“The tax exemption at all three stages of investment, interest and maturity may seem attractive, but it may not be able to beat inflation. Besides, if the economy grows and rates fall, the high 8.5% rate might not sustain.” – says one of the subject matter experts.
PPF and SSY
However, PPF has a 15 year term and a partial withdrawal system after 5 years. On the other hand, if a person starts investing when his daughter is 9 year old, he would not be able to collect enough money as per the goals in 21 years. Adding to this, this scheme only allows to withdraw 50% of the savings when the girl turns 18. From this aspect, PPF has the winning edge.
Fixed Deposits and SSY
A FD would give you return s on a short term but the rate of interest would be very low compared to the SSY and PPF both. The interest earned on an FD is also taxable so one can not avail any tax benefits here. A investor should only invest in FD for short term growth of wealth.
Sukanya Samriddhi Calculator
If you still plan on investing in the Sukanya Samriddhi Yojna, you can use a SSY calculator to calculate the maturity amount at the end of the tenure.
The calculator would ask you to input your daughters age and the amount you want to invest in the scheme. The minimum limit of investing in this scheme is Rs. 250 per financial year to a maximum of Rs. 1.5 lacs in a financial year.
According to the rules of the scheme, a depositor needs to deposit a fix amount every year for 15 years. From the 15th to 21st year, the depositor does not have to deposit anything. However, you will earn interests on all the earlier deposits made. The calculator would take into account the interest that would be accrued to you for those previous years.
Depending on your inputs, the calculator would show you the year when your scheme will mature, maturity value, the interest rate used to derive that maturity amount.