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Analyzing the Sukanya Samriddhi Yojna – Revised

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    Analyzing the Sukanya Samriddhi Yojna – Revised

    The Sukanya Samriddhi Yojna was launched by the Government of India in 2015 with the aim to provide financial help to a girl and her family. The money saved in this scheme is to financially facilitate the girl’s higher education and fund her marriage expenses. The account is opened in the name of a girl child of not more than 10 years of age who is a citizen of India. The account can be opened by the parents/or guardians in the name of the girl child. The salient features are as follows:

    Parameters Sukanya Samriddhi Yojna
    1. Tenure 21 years and mandatory deposit till 15 years (earlier 14 years) from date of opening.
    2.Tax exemption Yes, u/s 80C.
    3. Minimum and Maximum amount Rs.1000 and Rs.1,50,000/- (annually)
    4. Current Interest Rate (Quarter 3,FY17)  8.5% and decided quarterly. (Was  8.6% in Q2FY17)
    5. Pre mature withdrawal Upto 50% amount when girl attains 18 years of age.
    6.  Maturity Completion of 21 years from date of opening OR Girl is married/intends to marry before this tenure.

    Our call:-

    1.Your reason for opening this account could be – Tax exemption for self and/or building wealth for your daughter.

    2.For tax purposes, many of you exhaust your limit (u/s 80C) in the form of ELSS/ PF /Life insurance premium and hence the SSY account won’t be used as a tax-saving product.

    3.We feel this product is better suited for low income families as they get an additional benefit in the form of tax exemption.

    4.Considering the current education scenario, your daughter will require maximum support during her schooling & higher education – when she needs to prepare for competition, go for educational excursions within and outside India, enroll in foreign or expensive Indian private universities, which this Yojna fails to gratify.

    5.If you genuinely want to build wealth for your daughter’s future needs, the best way is Equity. The time horizon is long, there is no liquidity pressure and the purpose is defined.

    6.Start a SIP in an equity fund, dedicated to your daughter and let the compounding work its own way. Over the longer horizon, the equity returns surpass debt returns, and volatility is nullified.

    6.If one is risk averse, invest atleast 50% in Equity and the rest in debt or in a Balanced Fund (tax prudent) that will give you better returns and liquidity than SSY.

    If one can understand that the Girl child is a boon in the house and not a burden in the form of marriage expenses and her education, the scheme in itself shall not hold any weight.

     

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