A part of the Government’s small investment funds plans, the SSY regularly gets compared with items such as the PPF (public provident fund). The SSY does provide higher returns, of 8.4% than PPF 7.9%. But higher returns alone shouldn’t influence your investment choice. The SSY has certain in-built limitations that make it an illiquid item and ought to be chosen as it were in case it suits investor’s real objective of reserve funds for girl child’s future.
Rules of Sukanya Samriddhi Account (SSA)
- A Sukanya Samriddhi Account or SSA can be opened as it were up to 10 years of the young girl child.
- It matures on completion of 21 years from the date of account opening (it’s not related to the girl’s age).
- But deposits can be made only till 15th year. No deposits are permitted between the 16th and 21st years, in spite of the fact that the account proceeds to earn interest for 21 years.
In SSA opened on Dec 15, 2019, deposits can be made up to Dec 14, 2034 (15 years) and the account would mature on Dec 14, 2040, after 21 years. There’s an alternative for premature closure before 21 years since account opening for the girl’s marriage as it was accessible if she is over 18.
What if you need the money for the girl’s education before?
The SSY rules permit halfway withdrawal for higher education. You’ll withdraw up to 50% of SSA balance at the end of previous financial year. If you want to withdraw cash for your daughter’s education in August 2029, you’ll withdraw 50% of the balance after the past FY, March 2028.
Have to open the account early
If you don’t open an account for your daughter when she is exceptionally youthful, the SSY may not be sufficient to finance her higher education needs. In that case, the SSY becomes a tool to save for marriage as the account matures when the young lady is in her mid-to-late 20s (for accounts opened when the girl is aged 5-10). Many guardians who had opened an SSA realize this late due to the misconception that the account matures when their girls turn 21. In reality, the account matures 21 years after being opened and not when the girl turns 21.
Another factor to get it is that Sukanya Samriddhi Account could be a long-term item. But while saving for goals such as marriage and education, it’s conceivable that the SSY being an immaculate obligation item, not able to coordinate inflation’s pace and result in insufficient investment funds. And if the interest rates drop, SSA investment funds may not develop sufficiently to meet your necessities.
For those who have exceptionally young daughters, it makes sense to take exposure to equity as well as it’s the only way to defeat inflation within the long run. Equity mutual funds give you the leading shot at inflation-beating returns within the long run.
So, if you need some amount for your daughter’s education after 12-15 years and for marriage after 20 years, at that point consider investing in equity funds through regular SIP (systematic investment plan). In spite of the fact that SSY includes a great tax status, it may not assist you fulfill your daughter’s education and marriage objectives.