Investment for Girl Child: Sukanya Samriddhi Yojana vs PPF, which one is better and why?

After the launch of Sukanya Samriddhi Yojana (SSY), Indian parents having girl child have been pumping their surplus fund into the government's most ambitious girl child scheme meant for girl child education under the 'Beti Bachao Beti Padhao' project. However, investment experts are of the opinion that one shouldn't invest his or her entire fund into the SSY rather they should diversify their investment and put some money into the PPF (Public Provident Fund) and avail some tax benefits. They say both PPF and SSY will give same return at the time of maturity. They say unlike SSY, PPF investments can be made for the time period which suits the choice of the investors. So, diversification of funds in SSY and PPF is better than putting only in SSY. However, they maintained that one having a girl child must have some investment from his saving corpus in the SSY.

Comparing SSY and PPF Kartik Jhaveri, Director — Wealth Management at Transcent Consultants told Zee Business Online, "In SSY, an investor gets a return of around 8.5 percent on his or her investment with income tax exemption up to Rs 1.5 lakh investment in the plan. However, if we look at the PPF investment, the return is to almost same tune with the same income tax benefits but an investor can invest in it till he or she wants to invest in." Jhaveri said that in PPF an investor has the luxury to withdraw the entire amount after 15 years of investment or he or she can continue it till he or she wants to invest. 

But, in the case of SSY, your money is locked until your daughter becomes 18 years of age. After 18 years of your daughter, you can fish out 50 per cent of your investment and the rest of the amount can be withdrawn when your daughter attains 21 years of age. In this mode of investment, you can invest until your daughter attains 14 years of age.

Elaborating upon the SSY and PPF investment Jitendra Solanki, a SEBI registered investment expert said, "In PPF, one can get 8 per cent of return while in SSY, you get 8.5 per cent return per annum. So, for the beginner, SSY looks better but they need to remember SSY is an asset investment while PPF is a more liquid investment. After five years of investment, one can withdraw a partial or whole amount he or she has invested." Solanki added that in SSY, the investor becomes a disciplined investor as his amount can't be used for anything other than the purpose of investment.

"In case of liquidity, an investor can reinvest his or her investment portfolio in PPF after five years in equity-linked plans and can avail around 10.5 per cent to 11 per cent after giving taxes on their returns while in PPF an investor can expect around 8 per cent average return for the same period while in SSY an investor can expect near 8.5 to 9 per cent on his or her investment for the same period of investment," said Solanki. 

He advised investors to diversify their portfolio by choosing PPF, SIP, and SSY so that he can maintain the discipline in his or her investment.