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Sukanya Samriddhi Yojana vs. PPF: If you wish to build a substantial fund for the future through monthly savings, both the Public Provident Fund (PPF) and the Sukanya Samriddhi Yojana (SSY) are excellent options. Both are government-guaranteed schemes, so there is no risk of losing your capital. However, the question arises: if you deposit ₹5,000 every month, which scheme yields a higher return? Let’s look at the detailed calculations.

What is the difference between PPF and the Sukanya Yojana?

Any Indian citizen—whether a salaried employee, farmer, shopkeeper, or small business owner—can open a PPF account. Currently, the scheme offers an annual interest rate of 7.1% and has a lock-in period of 15 years.

In contrast, the Sukanya Samriddhi Yojana is designed exclusively for the girl child. An account can be opened in the name of a girl under the age of 10. Currently, this scheme offers an annual interest rate of 8.2%. Contributions are made for 15 years, but the account matures after 21 years.

What is the total investment if ₹5,000 is deposited monthly?

If you deposit ₹5,000 per month, your annual investment totals ₹60,000. Continuing this for 15 years results in a total investment of ₹9 lakh. Let’s see how much this ₹9 lakh can grow over time.

How much money can be accumulated in PPF?

If you deposit ₹60,000 annually into a PPF account for 15 years at an interest rate of 7.1% per annum, your total investment will be ₹9 lakh. You would earn approximately ₹7.27 lakh in interest. Upon maturity, you would receive around ₹16.27 lakh. In other words, an investment of ₹9 lakh grows to over ₹16 lakh in 15 years.

How much money can be accumulated in the Sukanya Yojana? If you open a Sukanya Samriddhi Yojana account for your young daughter, the scenario changes significantly. If you deposit ₹60,000 annually for 15 years, your total investment amounts to ₹9 lakh.

However, even after deposits cease after 15 years, the account continues to earn interest until it matures at the 21-year mark. Based on the current interest rate of 8.2%, you could receive approximately ₹30.7 lakh upon maturity. In other words, an investment of ₹9 lakh can grow to over ₹30 lakh.

Why does the Sukanya scheme yield higher returns?

There are two main reasons for this. The first is the higher interest rate; currently, the Sukanya scheme offers a higher interest rate than the PPF. The second reason is the extended period of compounding. You deposit money for 15 years, but the funds continue to earn interest for another six years thereafter. This is why there is a substantial difference in the final corpus.

Tax benefits are also available.

Both PPF and Sukanya Samriddhi Yojana offer tax benefits. Deposits made into these schemes qualify for a deduction of up to ₹1.5 lakh annually under Section 80C of the Income Tax Act.

Tax is not levied on the investment itself, nor on the interest earned or the maturity proceeds. Essentially, you enjoy tax exemptions at all three stages: investment, interest accrual, and maturity.

Which scheme is better for whom?

If you have a daughter and wish to save for her education, marriage, or future, the Sukanya Samriddhi Yojana could be a better option. It offers the advantage of long-term investment growth.

On the other hand, if your goal is to build a retirement fund, the PPF might be a better choice. Another advantage of the PPF is that anyone can invest in it.

Which offers greater benefits?

In terms of returns alone, the Sukanya Samriddhi Yojana appears to outperform the PPF based on current interest rates. While a monthly investment of ₹5,000 can build a corpus of approximately ₹16.27 lakh in a PPF account, the same amount could grow to around ₹30.7 lakh under the Sukanya Yojana.

However, investment decisions should not be based solely on returns; it is also important to consider the specific goal for which the money is being saved. The Sukanya Yojana may be a better choice for a daughter's future, whereas PPF is considered a strong option for long-term savings.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.