SIP vs Sukanya Samriddhi Yojana: Where Should You Invest for Your Child’s Better Future?

SIP vs Sukanya Samriddhi Yojana: Which is Better for Your Child’s Future? See Full Calculation

Every parent wants to secure a bright and stable future for their child. Whether it's for higher education, marriage, or starting a career, financial planning from an early stage is crucial. Two popular investment options in India stand out when it comes to long-term, child-centric savings:

SIP (Systematic Investment Plan)
Sukanya Samriddhi Yojana (SSY)

But which one is more suitable for your needs? In this blog, we’ll break down both options in detail, comparing returns, tax benefits, flexibility, and risk. We’ll also present a practical 15-year investment calculation to help you make a more informed decision.

 What is Sukanya Samriddhi Yojana (SSY)?

Launched by the Government of India, the Sukanya Samriddhi Yojana is a savings scheme designed specifically for the girl child. It encourages parents to build a financial corpus for their daughter’s future education and marriage expenses.

 Key Features:

• Only applicable for girls below 10 years of age.
• Minimum investment: ₹250 per year; Maximum: ₹1.5 lakh per year.
• Account matures after 21 years from the date of opening or after the girl turns 18 and gets married.
• Current interest rate (FY 2024–25): 8.2% per annum (compounded annually).
• Tax benefits: Falls under the EEE category – investment, interest earned, and maturity amount are all tax-free.

 What is SIP (Systematic Investment Plan)?

SIP is a method of investing in mutual funds, particularly equity funds, where you invest a fixed amount every month. It offers the power of compounding and rupee cost averaging, making it a great tool for long-term wealth creation.

 Key Features:

• Available for both boys and girls – no age restriction.
• Minimum SIP can start from ₹500 per month.
• Historically, SIPs in equity mutual funds have delivered 12–15% annual returns.
• Tax benefits: Investment in ELSS (Equity Linked Saving Schemes) under Section 80C up to ₹1.5 lakh.

 SIP vs Sukanya Samriddhi Yojana – A Comparative Overview

 Calculation: Investing ₹5,000 per Month for 15 Years

Let’s assume you invest ₹5,000 per month in both options for 15 years.

 Sukanya Samriddhi Yojana (15 years deposit + 6 years wait till maturity):

• Investment Period: 15 years
• Total Investment: ₹9,00,000
• Interest Rate: 8.2%
• Maturity Amount at 21 years: Approx. ₹22.4 lakh

 SIP (15 years, 12% expected annual return):

• Investment Period: 15 years
• Total Investment: ₹9,00,000
• Maturity Value @ 12%: Approx. ₹25.3 lakh
• Maturity Value @ 15%: Approx. ₹32 lakh

 Insight: SIP has a higher potential return, but also involves market risk. SSY offers guaranteed and tax-free returns, but only for girl children.

 Tax Implications

• SSY is under the EEE category – all proceeds are completely tax-free.
• SIP (ELSS) provides tax deduction under 80C, but any gains over ₹1 lakh per year attract Long-Term Capital Gains Tax (LTCG) at 10%.

 Which One Should You Choose?

 Can You Invest in Both?

Yes! Ideally, you should consider investing in both:

• Use SSY for secure savings for your daughter’s marriage or education.
• Use SIP for flexible, high-growth investments for any child.

Combining both gives you a balanced approach to risk and return.

Choose Smartly for Your Child’s Future

When it comes to building a solid financial future for your child, both SSY and SIP offer valuable benefits.

• Choose SSY if you want low-risk, tax-free, and guaranteed savings for your daughter.
• Choose SIP if you are comfortable with some market volatility in exchange for potentially higher returns and more flexibility.