Why Sukanya Samriddhi Yojana is a better investment plan for your daughter

July 21, 2020

Sukanya Samirddhi Scheme

For every parent, having a girl child is always a blessing. Just like any parent, you also dream of showering your daughter with all the happiness, but what most tend to ignore is ensuring the financial security of their future.

The education fees, tuition fees, and other expenses related to your child's overall grooming are skyrocketing. As a parent, you must have saved enough funds, but that would fall short for funding your child's higher education, marriage, or business purposes. A traditional Savings Account fails to beat the rising inflation rate. You should start investing in saving schemes like the Sukanya Samriddhi Yojana (SSY), a Government-backed initiative dedicated to those with a girl child.

The scheme is a part of the Beti Bachao, Beti Padhao campaign that was started in 2015 to spread awareness and improve the efficiency of welfare services intended for the girls in India. As a part of the SSY scheme, parents or guardians can open a savings plan in their girl child's name at any authorised bank or post office.

Features of SSY

  • The parents of a girl child are eligible to apply for SSY scheme. At the time of application, the girl child should be under the age of 10.
  • The lock-in period of SSY is 21 years from the date of account opening.
  • The interest rate is 8.5% per annum.
  • As per the SSY, the number of accounts parents can open is restricted to two.
  • The maximum investment limit is Rs 1.5 lakh and the minimum amount is Rs 250. There is no restriction on the number of deposits made in a month or a year.
  • As a parent, you're allowed to make a pre-mature withdrawal only once, that too when your daughter attains 18 years of age.
  • Unlike children mutual funds where expense ratio is charged as a maintenance cost, SSY Account does not charge any costs.

Benefits of SSY

  1. Guaranteed returns: Post the SSY scheme's maturity, the girl child receives the account balance along with the interest.
  2. Interest accrued post maturity: Another unique benefit of the scheme is that interest accrues even after the maturity and until the time the account is closed by the account holder.
  3. Lock-in period: The actual term period of the scheme is 21 years. Banks permit partial withdrawal for higher education, only when the girl child becomes 18 years old. Besides, banks allow only 50% of the pre-mature withdrawal.
  4. Tax-efficient: Under Section 80C of the Income Tax Act, 1961, individuals can claim tax deductions up to Rs 1.5 lakh for the contribution made towards the SSY scheme.

If you have a girl child, this is the best low-risk investment option to secure your daughter's future. Moreover, it is affordable as compared to Mutual Fund schemes. So, go ahead and start investing in SSY to accumulate an adequate corpus for your daughter's brighter future.

 

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