Sukanya Samriddhi Yojana vs SIP: Which investment can offer higher return on Rs 1.1 lakh over 15 years
Compare SIP and Sukanya Samriddhi Yojana to find which offers better returns on a Rs 1.1 lakh investment over 15 years. Understand tax benefits, interest rates, and long-term growth potential.
When it comes to long-term savings for your child’s future, choosing the right investment plan is crucial. Two popular options are the Systematic Investment Plan (SIP) in mutual funds and the government-backed Sukanya Samriddhi Yojana (SSY) for girl children. Both schemes offer unique benefits—while SIPs provide flexibility and potentially higher returns, SSY ensures guaranteed, tax-free interest. In this article, we compare SIP and SSY based on a Rs 1.1 lakh investment over 15 years to determine which yields better returns.
What is SIP (Systematic Investment Plan)?
SIP is a method of investing in mutual funds where a fixed amount is regularly invested. It allows investors to benefit from rupee cost averaging and compounding over time.
How Does SIP Work?
A set amount is automatically deducted from the investor’s bank account and used to purchase mutual fund units. These units accumulate and grow with market performance.
SIP Returns on Rs 1.1 Lakh Investment Over 15 Years
- Monthly Investment: Rs 9,167
- Total Investment: Rs 16,50,060
- Estimated Returns: Rs 29,75,388
- Total Value: Rs 46,25,448 (Assuming an average return of 12% annually)
What is Sukanya Samriddhi Yojana (SSY)?
SSY is a government-backed savings scheme for a girl child. It offers a fixed annual interest rate of 8.2%, compounded yearly, with tax-free returns.
SSY Deposit Limits and Tenure
- Minimum Annual Deposit: Rs 250
- Maximum Annual Deposit: Rs 1.5 lakh
- Deposit Duration: Up to 15 years
- Maturity: After 21 years or upon the girl’s marriage after 18 years
SSY Withdrawal Rules
Partial withdrawal of up to 50% is permitted after the girl turns 18 or completes 10th standard, for education or marriage-related expenses.
SSY Returns on Rs 1.1 Lakh Investment Over 15 Years
Total Investment: Rs 16,50,000
Total Interest Earned: Rs 34,30,224
Maturity Value: Rs 50,80,224 (at 8.2% fixed interest rate)
Tax Benefits: SIP vs SSY
- SSY: Investments qualify for Section 80C deductions and interest is completely tax-free.
- SIP: ELSS mutual funds offer 80C benefits, but returns are subject to capital gains tax depending on fund type and holding period.
SIP vs SSY: Key Differences
- SSY: Risk-free, fixed returns with limited liquidity.
- SIP: Market-linked returns with higher growth potential and greater flexibility.
Final Verdict: Which One to Choose?
Choose SSY for stable, long-term savings with guaranteed returns, especially for a girl child’s future. Opt for SIP if you’re looking for flexibility and potentially higher returns through market-linked growth.