Sukanya Samriddhi vs PPF – What to Choose for Daughter?
What is best for the better future of the daughter – Public Provident Fund i.e. PPF or Sukanya Samriddhi Yojana (SSY) will depend on many things. For example, when you start investing for daughter and how much money you invest in either SSA or PPF.
Let us help you compare PPF vs SSA:
If you have recently or some time ago become the father of a daughter and are thinking of investing for daughter for her future, you may have thought about Public Provident Fund i.e. PPF and Sukanya Samriddhi Account. Before investing in both, special attention is given to factors such as risk and the interest rate.
Sukanya Samriddhi Yojana receives 50 basis points or 0.5% higher interest than PPF.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is for the daughters’ bright future. In this scheme, account can be opened for the daughter up to 10 years old. The scheme will be mature when the daughter is 21 years old. However, putting money into the scheme means that the money will be locked at least until the daughter is 18 years old.
Even after 18 years, only 50% of the money can be withdrawn. All money can only be withdrawn when the daughter is 21 years old. Note that the money can be deposited till the daughter is 15 years old. However, the interest on this money will continue till the age of 21. It currently receives 7.6% annual interest. However, account can be opened for maximum of two girls. But in case of twins, an account of up to 3 girls can also be opened under the scheme. Parents can deposit a minimum of Rs. 250 and a maximum of Rs 1.5 lakh per annum.
When it comes to PPF, it has a short-term lock-in period as compared to the Sukanya Samriddhi Yojana and also gets tax free interest. PPF currently receives interest at the rate of 7.1%. In one financial year, there is a limit of investment up to 1.5 lakh rupees.
This investment gets tax exemption under section 80C. There is no tax on interest income also. The amount on maturity also does not come under the purview of tax. It is mandatory to deposit at least Rs. 500 per year in PPF account. Its lock-in period is 15 years, but from the 7th year you can make partial withdrawals with certain conditions.
So what to choose for daughter – PPF or SSY?
The answer to this question depends on your situation. If you open an account under the Sukanya Samriddhi Yojana in the name of your daughter, the sooner the investment will start, the better it will be. If you start investing early, the Sukanya Samriddhi Yojana is best for you, as you can invest till the daughter is 15 years old. You will have a good money deposited for the future of your daughter.
The second is the situation when you open your account after your daughter has grown up. Suppose you open an account of an 8-year-old daughter in the Sukanya Samriddhi Yojana, you can invest only for 7 years (till the daughter is 15 years old). In such a situation, you will not have to deposit more money, so you can opt for PPF. However, PPF will earn less interest compared to Sukanya Samriddhi Yojana.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.