Sukanya Samriddhi Yojana (SSY) and Public Provident Fund (PPF) are two government backed savings schemes that offer long-term investment options but cater to different needs. While SSY is designed specifically to help parents build savings for their daughters' future, PPF is open to all Indian residents and is commonly used for long-term savings and retirement planning.
How Do Both Differ?
SSY is specially designed for a girl child. Parents can open an account if their daughter is below 10 years old. It offers an attractive interest rate and tax benefits and matures after 21 years from the date of opening the account. Contributions can be made till 15 years of age and the money can be used for factors like education or marriage. Currently, it comes with 8.2% returns p.a.
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PPF is also a popular tool that comes with tax free interest and maturity corpus value. Contributions into PPF also come with tax exemptions. Every financial year, investors can contribute between Rs 500 and Rs 1.5 lakh and earn 7.1% p.a. The money remains locked for 15 years and can be either withdrawn or extended in another five year blocks. During the extension of the scheme, investors may or may not make more investments. PPF can also be opened for minors.
Investing Rs 1 lakh per year in SSY:
Yearly investment: Rs 1 lakh
Child's age: 5 years
Start period: 2026
Returns: 8.2%
Investment: Rs 15 lakh
Interest: Rs 31.18 lakh
Maturity: 2047
Maturity value: Rs 47.88 lakh
Investing Rs 1 lakh per year in PPF:
Yearly investment: Rs 1 lakh
Returns: 7.1%
Total investment: Rs 15 lakh
Time: 15 years
Total interest: Rs 12.12 lakh
Maturity: Rs 27.12 lakh
Which Is Better?
The calculations show that SSY can be more beneficial since it comes with higher returns compared to PPF. If you have a daughter, SSY can be a good choice, allowing you to earn meaningful returns and invest in her future. For general savings and retirement planning, PPF is more suitable. Both are government backed, come with guaranteed returns, and offer tax benefits, making them a must-have diversification tool for your child's portfolio.
ALSO READ: PPF Still Pays 7.1%: Should Long-Term Savers Wait For A Rate Hike?
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