Annual SIP vs Sukanya Samriddhi Yojana: Which can offer higher return on investment of Rs 1.5 lakh?
Compare Sukanya Samriddhi Yojana (SSY) and Systematic Investment Plan (SIP) for Rs 1.5 lakh annual investment. Explore returns, benefits and suitability.
Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme for girl children, offering tax-free returns at a fixed interest rate. On the other hand, a Systematic Investment Plan (SIP) allows periodic investments in mutual funds, leveraging market-linked returns. This article include SSY and SIP for an annual investment of Rs 1.5 lakh, evaluating returns, tax benefits and flexibility.
SSY vs SIP: Sukanya Samriddhi Yojana (SSY): Key Features
Interest Rate: Currently 8.2% per annum (as of 01-01-2024), compounded yearly.
Deposit Limits: Minimum Rs 250; maximum Rs 1.5 lakh annually. Deposits can be made in lump sum or multiple installments.
Eligibility: Account can be opened by a guardian for a girl child below 10 years.
Maximum two accounts per family (exceptions for twins/triplets).
SSY vs SIP: Tax Benefits of SSY
Deposits qualify for deductions under Section 80C of the Income Tax Act.
Interest earned is tax-free.
SSY vs SIP: Operation and Withdrawal Rules
- Account operated by guardian until the girl child turns 18.
- 50% withdrawal allowed after age 18 for education or marriage.
SSY vs SIP: Maturity and Premature Closure
- Matures after 21 years or upon marriage after age 18.
- Premature closure allowed under specific circumstances like death of the account holder or guardian.
SSY vs SIP: Returns on Rs 1.5 Lakh Annual Investment in SSY
- Total Investment: Rs 22.5 lakh (15 years).
- Total Interest Earned: Rs 46.77 lakh.
- Maturity Value: Rs 69.27 lakh.
SSY vs SIP: Systematic Investment Plan (SIP): Overview
What is SIP?
A method of investing in mutual funds by contributing a fixed amount periodically.
How it Works:
Fixed amounts are debited from the investor's bank account and invested in mutual funds, earning returns based on the fund's NAV.
SSY vs SIP: Advantages of SIP
- Allows smaller, regular investments rather than a lump sum.
- Reduces market risk through rupee cost averaging.
- Flexible withdrawal options—investor can choose periodic or end-tenure returns.
SSY vs SIP: Key Considerations for SIP
- Choose schemes aligned with long-term financial goals.
- No fixed "best time" to start; earlier investments yield better compounding benefits.
SSY vs SIP: Returns on Rs 1.5 Lakh Annual Investment in SIP
- Total Investment: Rs 22.5 lakh (15 years).
- Interest Earned: Rs 1.87 lakh.
- Maturity Value: Rs 24.37 lakh
SSY vs SIP: Comparison
SSY Advantage: Offers significantly higher returns due to a fixed high-interest rate and tax-free benefits.
SIP Advantage: Greater flexibility and market-linked growth potential, ideal for those comfortable with moderate risk.