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Difference Between Sukanya Samriddhi and Children Mutual Fund

08 June 2022

Are you concerned about Sukanya Samriddhi Yojana Vs Mutual Fund? It's understandable if it's perplexing. What is the best option for you? It is understandable to want to make the best decision possible, especially when your children's future is at stake.

Higher education and marriage are two significant expenses that a parent of a girl child would have to endure. Because they are costly, long-term planning is required. It necessitates long-term planning because they are expensive.

So let us look at the Best Saving Scheme for Girl Child that might help you to plan the appropriate option for your daughter.

Meaning of Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana (SSY) is a government-sponsored investment and savings program for parents of female children. The SSY scheme's primary goal is to encourage parents to make long-term investments in their daughters' education and marriage.

The SSY program is a critical component of the Beti Bachao, Beti Padhao initiative which was announced by India's Prime Minister in January 2015. Parents with a girl child under the age of ten are eligible for this initiative. The SSY plan investment is guaranteed for 21 years from the date the account is opened. However, from the date the account is opened, one may only invest for a period of 15 years.

Investments in SSY accounts are tax-deductible under Section 80C of the Income Tax Act of 1961. These accounts allow for annual investments of up to Rs.1,50,000, with a minimum of Rs.250 required. SSY accounts can be opened and operated at any authorized bank or the India Post Office branch.

Sukanya Samriddhi Yojana in Brief

  • Parents of the girl child can invest Rs. 1,000 and up to Rs. 1.5 lakhs every year into the Sukanya Samriddhi Yojana Account.
  • Deposits can be made only for the first 15 years after opening the account.
  • At maturity, the funds will grow with the accumulated compound interest.
  • This accumulated sum can benefit your daughter with her higher education, starting a business, or for marriage, all of it once she turns 18.

NOTE: You can calculate your SSY Returns by using the SSY Calculator

Meaning of Children’s Mutual Funds

The Sukanya Samriddhi Yojana is one option to secure the future of your girl child, but there is another: Children's Mutual Funds. There are several child plans and children gift plans available on the market today, with lock-in periods of five years or until the girl child reaches the age of 18.

A high-performing general mutual fund can provide significantly higher returns than a child plan. If you have a longer time horizon and are willing to accept a higher level of risk, you can invest in funds that match it. If these conditions are not met, you can invest in short-term mutual funds that could be the best Investment Schemes for a Girl Child. You may have also heard of Children's Gift Mutual Funds.

Children’s Mutual Funds in Brief

  • As a parent or even a legal guardian, you can invest in these on behalf of your child.
  • These are also plans that are not always restricted to girl children.
  • At maturity, the funds might help you to carry out the education and marriage of your child.
  • You can also choose your own lock-in period for the funds.
  • You can choose funds based on risk appetite and returns.

SSY Vs Children’s Mutual Fund – Which One Would Be Better for You?

It can sometimes be hard to find out what is the best saving plan for your daughter. Given the two situations, you can also never come to terms with what suits you best. Now that you know what these plans are and how each of them works, you might get a dip into how each one of these would work out for you.

Both the options have their pros and cons, and you can only choose one based on your goals.

Sukanya Samriddhi Vs Children’s Mutual Fund – Key Differences

Let us have a look at the major differences between Sukanya Samriddhi and Children’s Mutual Fund based on various points here-

 

Sukanya Samriddhi Yojana

Children’s Mutual Fund

Account Establishment

A parent or legal guardian can only open an SSY account in the name of a girl child.

A parent can open a children's mutual fund account in the name of their child.

Account Management

The SSY account can be managed by the parents or legal guardians until the girl child reaches the age of 18. Following that, the child assumes control of the account.

Parents or legal guardians can invest in and manage their children's mutual funds accounts. These accounts have a 5-year lock-in period or until the child turns 18.

Age Constraint

10 years is the maximum age to open an SSY account.

18 years is the maximum age to open a Children's Mutual Fund account.

Nominations

These accounts do not have a nomination feature.

In the Children's Mutual Fund accounts, all mutual fund houses provide a nomination facility.

Amount of Investment

This scheme requires a minimum deposit of Rs.250 and a maximum deposit of Rs.1.5 lakh.

These require a minimum deposit of Rs. 500 with no upper limit on the amount of money that can be invested.

You may also want to read Best Mutual Fund Plans for Your Children in 2022

Conclusion

When it comes to Sukanya Samriddhi Yojana Vs Mutual Fund, it can be a little confusing. The returns of Mutual Funds are higher than that of SSY, but it also comes with their share of risks. On the other hand, SSY is a secure and guaranteed return for the account holder.

Please remember, before choosing the most suitable option for yourself, it is very important to conduct proper research along with considering all the factors that would be suitable for you.

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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