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Interest rate, other details that you should know


SSY vs PPF: Both Sukanya Samriddhi Yojana (SSY) and Public Provident Fund (PPF) are one of the high yielding Government of India (GoI)-backed investment instruments. But, Sukanya Samriddhi account can be opened for a girl child only while PPF can be opened by any earning individual. According to tax and investment experts, both options have a lock in period but PPF interest rate is 7.1 per cent while SSY interest rate is 7.6 per cent — 0.5 per cent higher than PPF account’s current annual yield. However, they advised investors to remain vigilant about other investment rules while investing for the girl child as mere interest rate is not enough for making an investment decision.

Speaking on SSY vs PPF SEBI registered tax and investment expert Jitendra Solanki said, “It depends on the timing of the investment. If an investor starts investing immediately after the birth of its girl child, then SSY is better suited as the investor will be able to invest in the Sukanya Samriddhi account till its child becomes 14 year old. However, if the investor is late in beginning the investment, then the principal accumulation will go down in SSY account as one can’t invest beyond 14 years of its girl child. In that case, PPF is better suited as it allows an investor to invest till its maturity of 15 years.”

Solanki said that SSY account requires strict and disciplined investment while PPF gives more flexibility to the investor. In SSY, premature withdrawal is very difficult while in PPF, one can withdraw entire PPF balance after 5 years of PPF account opening paying some penalty. So, those who want flexibility in one’s investment, PPF is better option than SSY, said Solanki citing, “SSY is an asset investment while PPF is a liquid investment and an investor needs to keep this basic difference between these two risk-free investment options in mind.”

Highlighting the difference between PPF and Sukanya Samriddhi account Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “In PPF, an investor is allowed to invest till it wants, while in the case of SSY, this option is absconding. In PPF, you can extend your investment period even after the maturity period while in SSY, you have no option but to withdraw the maturity amount even though you don’t need a lump sum amount at the time of Sukanya Samriddhi account maturity.”

Jhaveri went on to add that in SSY, an investor’s money is locked for 18 years. In fact, after 18 years, an investor is allowed to withdraw 50 per cent of the SSY account balance while rest 50 per cent can be withdrawn when the investor’s daughter become 21 years old.

Both Kartik Jhaveri and Jitendra Solanki advised investors to have a diversified portfolio with some fund allocation to the SSY account and some fund allocation to PPF, so that one can get luxury of both asset and liquid investment.

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