22 Differences: Sukanya Samriddhi Vs. Children Mutual Fund

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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.FeaturesSukanya Samriddhi AccountChildren Mutual Fund
1On whose name account can be openedOnly on girl's nameBoy or girl
2How many accounts can be opened per child1 per childNo limit
3Minimum age limit to open accountAs soon as girl child is born a/c can be openedVaries for each fund house. For e.g. Tata Young Citizen's Fund has min. age limit of 3 months
4Maximum age limit to open account10 years18 years
5Documents required to open the accountApplication form, birth certificate of girl, ID & address proof of parentsPhotocopy, address proof/ID proof, PAN card
6How many time you can deposit money in an yearUnlimitedUnlimited
7Interest RateFor 2014-2015: 9.1%
For 2015-2016: 9.2%
Not fixed. Since it is linked to market, interests keeps on varying
8Tax BenefitUnder section 80C on contribution. No tax on interest earnedDepends 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)
9Partial withdrawalYes. Once girl crosses 18 years of age, 50% can be withdrawnMostly after 3 years depending on the fund's terms and conditions
10Where can you open the account?Post offices and 28 authorized banksFund houses such as - Tata Mutual Fund, Kotak, SBI and many others
11Risk factor involvedNoYes, it's very high. Since it is linked to market and other factors
12Nomination facilityNoYes. Many fund houses provide this.
13Other benefits such as insurance cover etc.NoYes. Varies for each fund house
14Mode of depositCash/Cheque/Demand DraftCash/Cheque/Demand Draft/ECS/Credit Card/Debit Card
15Can NRI depositAs of now - NOMost of the fund houses allow provided their child is also an NRI
16MaturityWhen the girl child reaches 21years Can be withdrawn any time (subject to exit load)
17Minimum deposit/yearRs.1000Rs.500
18Maximum deposit/yearRs.1,50,000No limit
19Where is the money investedFor development of country such as infrastructure and othersEquities, debt instruments, securitized debt and other instruments
20Penalty, if money is not deposited in an yearRs.50No penalty
21Ideal forLong termLong term
22Application feesNoYes. Varies for each fund house
Note: Details mentioned above for children's mutual fund may vary for each fund.

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:

  1. HDFC Children’s Gift Fund
  2. SBI Magnum Children’s Benefit Plan
  3. Tata Young Citizen’s Fund

Read in detail about the features of Sukanya Yojana.

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