Should you invest in Sukanya Samriddhi Yojana or fixed deposits?

Among the numerous investment options available in India, finding the right avenue is a crucial financial decision. The most suitable investment option will not only allow a user to set aside a fixed sum but also helps to increase one’s savings as well. Therefore, it is essential to find financial instruments that best suit your requirements and future financial goals. This eclectic mix of various investment goals might involve investing in your child’s future or include your retirement savings.

For parents seeking to invest in their girl child’s future, the safety of their importance is of paramount importance. Hence, you must look for a stable investment option. Thus, it is vital to understand Sukanya Yojana details and fixed deposit – both being prominent investment avenues. However, determining a better option can be tricky. Take a look at both of these investment options and then make an informed decision.

What is Sukanya Samriddhi Yojana (SSY) scheme?

This is a Government of India backed savings scheme that enables parents of a girl child to create a substantial fund for her future education and wedding expenses. To know about Sukanya Yojana details, take a look at the features of this scheme –

  1. Applicant can invest in this secure scheme for up to 14 years and receive the total amount on attaining maturity after 21 years of opening the SSY account.
  2. The current interest rate on the SSY scheme is 8.5%* (As per data from the 1st of January to 31st of March, 2019.)
  3. The lock-in period of Sukanya Samriddhi Yojana scheme is either up to 21 years or until the girl child gets married – whichever arrives earlier. 
  4. An SSY account holder can withdraw up to 50% of the deposited sum post 18 years. 
  5. Applicant can claim a tax deduction of up to Rs. 1.5 Lakh as per the Income Tax Act and the returns are not calculated as taxable income.

By now, you are aware of the Sukanya Yojana details and its set of benefits. However, parents often consider fixed deposits as a better investment option to secure their child’s future. Take a look at why FDs are the most preferred choice.

Advantages of investing in fixed deposits

It is a fixed-income investment that enables one to benefit from a guaranteed return. Once lump sum money is invested in fixed deposits, the money is locked-in for a predetermined period. During this period, the FD interest gets accumulated. This FD interest rate is pre-decided by the lender and is immune to the market forces.  For instance, Bajaj Finance offers up to 8.85% interest rate on fixed deposits. You can choose your preferred tenor ranging from 12-60 months. Post the maturity date; you will receive the invested sum along with the accumulated interest sum.

Here are some of the benefits you can enjoy investing in fixed deposits –

  1. Sukanya Samriddhi Yojana is tailor-made for a girl child, making it a limited financial avenue. On the other hand, you can invest in a fixed deposit, even if you have a son. 
  2. You are provided with the privilege to choose your investment amount from as low as Rs. 25000 and ladder your investments with time to earn better returns. 
  3. Applicant can benefit from substantial FD interest rates with additional returns of up to 0.35% or above on the regular rate, in case of senior citizens. SSY is thus an ideal investment avenue to secure both your child’s future and post-retirement plans as well.
  4. If you are worried whether fixed deposit investment is safe, know that it is backed by the DICGC (Deposit Insurance and Credit Guarantee Corporation) scheme.
  5. You can earn better FD interest rate than what Sukanya Yojana offers. 
  6. Moreover, you can hold more than one fixed deposit account and avail a loan against the accumulated amount if required.
  7. You can also adjust the tenor and the deposit amount to generate better returns as per your financial goals.
  8. An FD account holder has the liberty to choose how he/she wants the interest pay-out. Payouts can be timed periodically or post-maturity as per requirements.

All of these points out that investing in fixed deposits continues to be a popular and advantageous investment scheme. Now, it is up to you to choose an investment option that best suits your requirements and financial portfolio.