InvestorQ : Is the Sukanya Samriddhi Yojana (SSY) account a good investment option for a person who already has a PPF account?
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Is the Sukanya Samriddhi Yojana (SSY) account a good investment option for a person who already has a PPF account?

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3 years ago
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Before answering your question, let’s first understand what both these investment options are.

PPF account

A PPF account, or a Public Provident Fund, is a long-term small-savings scheme that is operated by the government of India. A PPF account is one of the most traditional savings schemes that has existed in India and was designed as a retirement tool. For this very reason, a PPF accounts locks a subscriber’s money for the long term- in this case, 15 years.

PPF accounts find many takers in India as it is tax efficient. The returns one earns from a PPF account are fully exempted from tax. Additionally, it can be claimed under Section 80C of the Income Tax Act, 1961. This means your investment of up to Rs. 1.5 lakh in a PPF account is eligible for tax deduction in every financial year. Furthermore, the interest you earn, as well as the maturity amount from the PPF account, too, is tax free.

Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) is a small- savings scheme backed by the Government of India exclusively for the Indian girl child. The scheme allows a parent or legal guardian to open an account in the name of a girl child until she becomes 10 years old.

The government’s objective behind launching this small savings scheme was to encourage parents to open accounts in their daughter’s names so that they can start saving for their education and marriage early on. The current rate of interest offered by the government on SSY account is 8.5%.

A few reasons why one can consider investing in the SSY despite having a PPF account are:

- SSY account is for the benefit of your daughter, while PPF will only be of help during your retirement

- If you invest in both investment options, you can save up to Rs 3,00,000 per financial year

- SSY offers better interest rates than PPF does

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