Post Office Small Savings:It is very important to do financial planning for the future of the child as soon as it is born. Failure to do so may increase tension regarding children’s higher education or money in marriage. There are many government schemes in which investments can be made in the name of children. Of these, two schemes, Public Provident Fund and Sukanya Samriddhi Yojana, are going to promote long-term investments. By investing in these, you can prepare a huge fund for your children. In today’s era, both are very popular investment schemes, which are completely safe.
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Why comparison of PPF and SSY?
Both Public Provident Fund and Sukanya Samriddhi Yojana are government schemes and accounts can be opened in any post office in the country.
Both the schemes have been designed keeping in mind long term investment, through which you can achieve your various financial goals.
Both the schemes have the facility to deposit a maximum of Rs 1.50 in a financial year, which can also be done on a monthly basis. If you invest Rs 12500 in both the schemes on monthly basis, the limit of Rs 1.50 lakh will be touched in a year.
Money has to be deposited in PPF for 15 years, maturity is also 15 years. You have to invest in Sukanya Samriddhi Scheme only for 15 years, although the account will mature after 21 years.
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Both schemes are completely tax free
Sukanya Samriddhi Yojana and PPF are tax free schemes. Tax exemption is available on these at three different levels i.e. EEE. First, exemption on annual investment up to Rs 1.50 lakh under Section 80C of the Income Tax Act. Secondly, there is no tax on the returns received from this. Third, the amount received on maturity is tax free.
PPF: Return Calculator
Maximum monthly deposit: Rs 12,500
Maximum annual deposit: Rs 1,50,000
Interest rate: 7.1 percent compounding annually
Amount on maturity after 15 years: Rs 40,68,209
Total investment: 22,50,000
Interest benefit: Rs 18,18,209
Investing Rules: Money has to double in 6 years and triple in 10 years, invest in the scheme giving how much interest, rules 72 and 114 will help.
SSY: Return Calculator
Interest on SSY: 8.2 percent per annum
Maximum limit of deposit in 1 financial year: Rs 1.50 lakh
(You can also deposit a maximum of Rs 12,500 monthly)
Investment in 15 years: Rs 22,50,000
Total amount on maturity of 21 years: Rs 69,80,100
Interest benefit: Rs 47,30,100
Same investment but difference in profits
It is clear from the calculation that as an investor in both the schemes, you can deposit a maximum of Rs 22.50 lakh in 15 years. PPF scheme matures only after 15 years and on maturity you get around Rs 40.68 lakh. That means the interest benefit in this is around Rs 18.18 lakh.
Whereas in Sukanya Samriddhi Yojana, in 15 years you deposit a maximum of Rs 22.50 lakh, equal to PPF. But the scheme matures after 6 years, so adding compounding to it increases the benefits. If you invest in SSA within the prescribed maximum limit, you get a fund of Rs 69.80 lakh after maturity, that is, the interest benefit is more than Rs 47.30 lakh.
