Sukanya Samriddhi Yojana (SSY) vs Fixed Deposit (FD): Which is better scheme to invest for a girl child?

Investment for a girl child is as important for a family as any other investment. The money could be used for her higher education and could also be spent on the marriage. While bank fixed deposits could be the traditional way of building a corpus, Central Government's Sukanya Samriddhi Yojana (SSY), launched as part of the 'Beti Bachao, Beti Padhao' campaign, is another lucrative option. 

The scheme was launched in 2015 by the Department of Ministry of Women and Child. The primary goal of this scheme to was encourage savings under the name of girl child. The amount invested in Sukanya Samriddhi Yojana gets matured in 21 years or when the girl child is about to get married..

Sukanya Samriddhi Yojana vs Fixed Deposit

An Indian citizen can open a bank fixed deposits in any financial institution, irrespective of age and gender. On the other hand, an account under SSY can only be opened for a girl before she turns 10.

Poonam Rungta, Certified Financial Planner, told Zee Business Online that SSY can give better return to investors than bank FDs. "This Sukanya Samriddhi Yojana scheme is very beneficial for the girl child as its a means of investment with high return," she said. 

To open an account under SSY, the investor needs to put between Rs 250 and Rs 1,50,000 per year. Meanwhile, the minimum amount that has to be invested in fixed deposits is Rs 100. The investors can withdraw the money prematurely in FDs, but in SSY scheme, it can only be done if the girl child turns at least 18.

Interest rates offered

The interest rate offered in case of bank FDs differs from bank to bank. It also depends on the time for which the investment is made. For example, SBI is providing 8.5% interest for F.D. Account.

For Sukanya scheme, the government is currently offering an interest rate of 8.1%. In FY 2015-16, this rate was 9.2%. The Sukanya Account is linked up to 10 years Govt. Bond Yield and the rate of interest is 0.75% higher than Govt. Bond yield. 

Which is better investment option?

"SSY is very secured and backed by the Government of India which the Fixed deposit schemes are not," Rungta said, while adding that since FDs allow premature withdrawal, people tend to take out the money in case of emergencies. "Also, most of the times, they are not in the name of the girl child whereas SSY is exclusively for the girl," she added. 

Pankaj Mathpal, MD, Optima Money Manager, believes that the returns on SSY are also tax-free which makes it a better long-term investment. "Whatever you invest, you get continuous returns which are tax-free and when the girl turns 21 you can withdraw money, so it's a long-term saving and when compared to FD it is definitely better," he told Zee Business Online.