SSY vs MF: While there are many investment options available to secure your children’s future, the Sukanya Samriddhi Yojana (SSY) and mutual funds (MFs) are two key avenues. SSY is a government-backed scheme that offers a fixed interest rate of 8.2% and is risk-free. In contrast, investing in mutual funds is market-dependent, offering the potential for higher returns, but also carries risk.
Investment limit and tenure
SSY has a maximum annual investment limit of Rs 1.5 lakh and comes with a lock-in period of 21 years. While there is no investment limit in mutual funds, you can invest in small amounts through SIPs. The lock-in period for mutual funds typically ranges from 3 to 5 years, but it depends on the type of fund.
Tax benefits and risks
SSY investments offer tax benefits under Section 80C of the Income Tax Act and carry a very low risk. Tax benefits in mutual funds are available only in tax-advantaged schemes like ELSS. Furthermore, mutual fund returns can fluctuate due to market fluctuations.
What is the opinion of experts?
Financial experts believe that mutual funds can provide better returns over the long term, especially if you are willing to take risks. However, if you want safe and assured returns, SSY is a better option. Combining investments in both can also be a better strategy to balance risk and returns.
When investing for your girl child’s future, evaluate your financial situation, risk tolerance, and investment horizon to choose the appropriate option between SSY and mutual funds. Choosing the right plan will not only increase financial security but also ensure adequate funds are available for future major needs like education and marriage.