PPF vs Sukanya Samriddhi Yojana: Which investment tool is better for your child? Check surprise answer

PPF vs Sukanya Samriddhi Yojana: Since inception, the Sukanya Samriddhi Yojana (SSY) has been attracting money from parents who want to ensure a good financial future for their daughters. However, investment experts are of the opinion that investment in SSY should not be preferred over PPF (Public Provident Fund) because SSY account accrues more returns than PPF. They were of the opinion that PPF investments can be made for the time period which suits the choice of the investors, which is not the case in regard to the SSY.

Comparing SSY and PPF, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "In SSY, an investor gets a return of around 8.4 per on its 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 7.1 per cent along with the same income tax benefits but an investor can invest in it till he wants to invest." Jhaveri said that in PPF, an investor has the luxury to withdraw the entire amount after 15 years of investment or continue investing in the block of five years by submitting Form H.

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But, in the case of SSY, your money is locked up till the daughter attains 18 years of age. In fact, even after 18 years, you can fish out only 50 per cent of the investment and the rest of the amount can be withdrawn when your daughter reaches 21 years of age.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 7.1 per cent of return while in SSY, you get 8.4 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 more liquid investment. After five years of investment, one can withdraw 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 the purpose other than the purpose of investment.

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