22 Differences: Sukanya Samriddhi Vs. Children Mutual Fund
Sukanya Samriddhi Account for the girl child has become a favourite investment option for long term investors wishing to build up wealth for the girl’s marriage or education. Sukanya yojana offers tax free returns. The interest rate for this scheme is 9.2% for the financial year 2015-2016 and it was 9.1% for the previous financial year 2014-2015. Check out maturity value calculation for SSA.
Although there are many investment instruments available in the market which are specially designed for child’s future such as public provident fund/child mutual fund/bank account for child/fixed deposits, the zero risk factor and high interest rate gives sukanya samriddhi yojana a higher edge helping in beating the inflation to a good extent. Explore the differences and similarities between public provident fund (PPF) and Sukanya Samriddhi Scheme.
Compared below are the features of SSA and Children Mutual Fund which will help in choosing a best investment option for your child
Sukanya Samriddhi Vs. Children Mutual Fund
| Sr.No. | Features | Sukanya Samriddhi Account | Children Mutual Fund |
|---|---|---|---|
| 1 | On whose name account can be opened | Only on girl's name | Boy or girl |
| 2 | How many accounts can be opened per child | 1 per child | No limit |
| 3 | Minimum age limit to open account | As soon as girl child is born a/c can be opened | Varies for each fund house. For e.g. Tata Young Citizen's Fund has min. age limit of 3 months |
| 4 | Maximum age limit to open account | 10 years | 18 years |
| 5 | Documents required to open the account | Application form, birth certificate of girl, ID & address proof of parents | Photocopy, address proof/ID proof, PAN card |
| 6 | How many time you can deposit money in an year | Unlimited | Unlimited |
| 7 | Interest Rate | For 2014-2015: 9.1% For 2015-2016: 9.2% | Not fixed. Since it is linked to market, interests keeps on varying |
| 8 | Tax Benefit | Under section 80C on contribution. No tax on interest earned | Depends on which plan you choose. E.g. Income from SBI's magnum children's fund is exempt from the income tax under section 10(23D) |
| 9 | Partial withdrawal | Yes. Once girl crosses 18 years of age, 50% can be withdrawn | Mostly after 3 years depending on the fund's terms and conditions |
| 10 | Where can you open the account? | Post offices and 28 authorized banks | Fund houses such as - Tata Mutual Fund, Kotak, SBI and many others |
| 11 | Risk factor involved | No | Yes, it's very high. Since it is linked to market and other factors |
| 12 | Nomination facility | No | Yes. Many fund houses provide this. |
| 13 | Other benefits such as insurance cover etc. | No | Yes. Varies for each fund house |
| 14 | Mode of deposit | Cash/Cheque/Demand Draft | Cash/Cheque/Demand Draft/ECS/Credit Card/Debit Card |
| 15 | Can NRI deposit | As of now - NO | Most of the fund houses allow provided their child is also an NRI |
| 16 | Maturity | When the girl child reaches 21years | Can be withdrawn any time (subject to exit load) |
| 17 | Minimum deposit/year | Rs.1000 | Rs.500 |
| 18 | Maximum deposit/year | Rs.1,50,000 | No limit |
| 19 | Where is the money invested | For development of country such as infrastructure and others | Equities, debt instruments, securitized debt and other instruments |
| 20 | Penalty, if money is not deposited in an year | Rs.50 | No penalty |
| 21 | Ideal for | Long term | Long term |
| 22 | Application fees | No | Yes. Varies for each fund house |
Final Note: Although both have their own pros and cons, investments in Sukanya Samriddhi Yojana can be made if you do not want to take risk with your money. For investors who are ready to take high risks, mutual fund is a better option. Also fund houses employ quality professional experts who diversify the money in various instruments.
Listed below are few funds for children:
- HDFC Children’s Gift Fund
- SBI Magnum Children’s Benefit Plan
- Tata Young Citizen’s Fund
Read in detail about the features of Sukanya Yojana.
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