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SIP vs. SSY: If you have a young daughter and wish to save ₹2,000 per month for her future, you have two popular options: the Sukanya Samriddhi Yojana (SSY) and a Mutual Fund SIP.

Both aim to build a substantial corpus over the long term, but their approaches differ. One offers a fixed interest rate guaranteed by the government, while the returns on the other depend on market performance.

So, if you invest ₹2,000 every month, which option could yield a larger corpus? Let’s find out.

How much of a corpus can a ₹2,000 SIP generate?

Suppose your daughter is currently 2 years old, and you want to build a substantial fund by the time she turns 23. You invest ₹2,000 per month via SIP for 21 years. Assuming an average annual return of 12%, the outcome would look something like this:

Details | SIP
--- | ---
Monthly Investment | ₹2,000
Investment Tenure | 21 years
Total Investment | ₹5.04 lakh
Estimated Return | 12% per annum
Estimated Maturity Amount | Approx. ₹22–24 lakh

In other words, while you invest only ₹5.04 lakh from your own pocket, the power of compounding could grow the fund to over ₹22 lakh.

How much money will you get from the Sukanya Samriddhi Yojana?

Now, let’s look at the calculations for the Sukanya Samriddhi Yojana. Here, you deposit ₹2,000 per month. Currently, the scheme offers an annual interest rate of 8.2%. In this scenario, the estimated outcome would look like this:

Details | Sukanya Samriddhi Yojana
--- | ---
Monthly Investment | ₹2,000
Deposit Tenure | 15 years
Scheme Maturity | 21 years
Total Investment | ₹3.60 lakh
Current Interest Rate | 8.2% per annum
Estimated Maturity Amount | Approx. ₹9.5–10 lakh*

*This estimate is based on the current interest rate of 8.2%. Interest rates may change in the future.

Why is there such a significant difference between the two?

At first glance, it might appear that the SIP generates much higher returns. However, it is important to understand the reason behind this. In the SIP example, investments are made continuously for 21 years. In contrast, the Sukanya Samriddhi Yojana requires deposits for only 15 years, yet the account matures after 21 years; this means interest continues to accrue during the final six years even without any new deposits.

Secondly, the SIP calculation assumes a 12% return, whereas the Sukanya Yojana calculation uses an 8.2% interest rate. This is the primary factor creating the difference between the two.

Which option should you choose?

If your top priority is complete safety and you wish to avoid market volatility, the Sukanya Samriddhi Yojana could be the better choice. It comes with a government guarantee, and the interest earned enjoys tax benefits.

However, if your goal is to build a substantial corpus over the long term and you are willing to accept some market risk, an SIP has the potential to deliver higher returns. Do note, however, that there is no guarantee of returns with an SIP.

Should you choose only one option?

You do not necessarily have to choose just one. Many financial planners suggest utilizing both options for your daughter's future.

For instance, you could invest ₹1,000 per month in the Sukanya Samriddhi Yojana and another ₹1,000 in an SIP. This approach creates a secure fund while simultaneously keeping the possibility of higher market-linked returns alive. You can also increase your investment amount as your income grows.

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.