A man is always worried about his family’s future and their well-being. He is in constant planning and processing ways to secure his family. Other day I met a friend who was worried about the future of his only daughter and since, I come from the financial background, asked me only one question, ‘which is the best way to secure my daughter’s future financially – ELSS or SukanyaSamriddhi yojna?’
After pondering over the question and having done some relative studying, I could give him some advice.
SukanyaSamriddhiyojna, started by our Hon. Prime Minister Narendra Modi in January 2015 for the well-being of the girl child in the country is an initiative towards empowering the girls. The scheme is a step towards saving for the girls and securing their future. The scheme is available in all the post offices in the country and a few selected banks.
Eligibility – Any girl child at the age of 10 or below is eligible for the scheme.
- The account can be opened by the girl or her parents or the guardians in case they are taking care of the girl.
- The account is valid for 21 years from the date of initiation and automatically closes if the girl gets married before the 21 year period.
- The scheme garners 9.2% interest per annum and the interest continues to add in the account if the girl is still unmarried after 21 years.
- Minimum amount for account initiation is 1000 rs and maximum is 150,000 rs.
- The girl can withdraw 50% of the deposited amount after the completing 18 years of age, in case of wedding or for higher education.
- The amount deposited is tax deductible under 80C and the interest and the maturity amount is tax free.
ELSS funds or Equity Linked Savings Scheme is a diversified equity based saving scheme that works based on the equity market. The risk is high since the stock market trading can be quite tricky. However, the rate of interest in ELSS is 12% with a lock-in period of only 3 years. Also, the returns are based on the equity market.
There are two options in ELSS that the investors can choose from – Growth and dividend options.
Upon comparison, we found that where ELSS was a high risk scheme, SSY was comparatively safer but the rate of interest was higher in ELSS.
For instance, if I was to deposit 15,000/- monthly in both the schemes, at the end of 15 years I would receive 5823947/- in SSY and 7568640/- in ELSS.
Although, the returns amount is higher in ELSS, the risk factor is lesser in SSY.
One can also take inconsideration the lock-in period of the two, in SSY it is about 12 years and in ELSS, it is only 3 years.
Which option he chose is yet unknown to me, but I’m sure, the evaluation made his choice easier.