Investing for girl child? This option is better than Sukanya Samruddhi Yojana

Rather investing in Sukanya Smruddhi Yojana and get your money stuck for 18 years, one can go for the PPF investment where an investor can invest for the period of his or her choice with same return and tax benefits.

Investing for girl child? This option is better than Sukanya Samruddhi Yojana
Sukanya Samruddhi Yojana is an asset investment while PPF and SIP are liquidity based investment which an investor must understand before making any investment decision. Photo: Pixabay
By Asit Manohar
Updated: Tue, Feb 19, 2019
03:37 pm
New Delhi, ZeeBiz WebDesk
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Ever since the Sukanya Smruddhi Yojana (SSY) has been launched, majority of the parents having a daughter have been flooding their investments in Narendra Modi's most ambitious scheme, which is meant for 'girl child education under the 'Beti Bachao Beti Padhao' project. However, investment experts are of the opinion that investment in PPF (Public Provident Fund) is a much better option with almost the same return and tax benefits. In fact, PPF investments can be made for the time period which suits to the choice of the investors, which is not the case in regard to the SSY.

Comparing SSY and PPF Kartik Jhaveri, Director — Wealth Management at Transcent Consultants told Zee Business Online, "In SSY, an investor gets a return of around 8.5 per on his or her investment with income tax exemption up to Rs 1.5 lakh investment in the plan. However, if we look at the PPF investment, the return is to the same tune with the same income tax benefits but an investor can invest in it till he or she wants to invest in." Jhaveri said that in PPF an investor has the luxury to withdraw the entire amount after 15 years of investment or he or she can continue it till he or she wants to invest. 

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But, in the case of SSY, your money is choked till your daughter becomes 18 years of age. In fact, even after 18 years of your daughter, you can fish out only 50 per cent of your investment and the rest of the amount can be withdrawn when your daughter attains 21 years of age. In this mode of investment, you can invest until your daughter attains 14 years of age.

Elaborating upon the SSY and PPF investment Jitendra Solanki, a SEBI registered investment expert said, "In PPF, one can get 8 per cent of return while in SSY, you get 8.5 per cent return per annum. So, for the beginner, SSY looks better but they need to remember SSY is an asset investment while PPF is more liquid investment. After five years of investment, one can withdraw partial or whole amount he or she has invested." Solanki added that in SSY, the investor becomes a disciplined investor as his amount can't be used for the purpose other than the purpose of investment.

"In case of liquidity, an investor can reinvest his or her investment portfolio in PPF after five years in equity-linked plans and can avail around 10.5 per cent to 11 per cent after giving taxes on their returns while in PPF an investor can expect around 8 per cent average return for the same period while in SSY an investor can expect near 8.5 to 9 per cent on his or her investment for the same period of investment," said Solanki. He advised investors to diversify their portfolio by choosing PPF, SIP, and SSY so that he can maintain the discipline in his or her investment.​