PPF vs Sukanya Samriddhi Account: Which Option is Better?

Greetings! Both Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are investing schemes backed by the Government of India, offering tax benefits and long-term financial security. However, there are key differences between these two schemes. Let's delve deeper into them to help you decide which might be the right fit for your investment needs.

Understanding PPF and SSY

Both PPF and SSY are aimed at providing financial growth and security, but they cater to different goals.

What is PPF?

The Public Provident Fund (PPF) was launched by the Government of India in 1965 to offer a retirement savings option for individuals in the unorganised sector or those not covered by the Employees Provident Fund (EPF) scheme. The primary objective of the PPF is to enable these individuals to build a robust retirement corpus. It is accessible through post offices across the country, making it highly accessible for many citizens.

PPF has a 15-year lock-in period during which funds cannot be withdrawn until the maturity period. It offers a guaranteed interest rate on the invested amount, currently at 7.1%. PPF also comes with tax benefits under Section 80C of the Income Tax Act, allowing individuals to invest up to Rs 1.5 lakh per financial year and claim deductions on these investments. The risk associated with PPF is low, making it a popular choice among risk-averse investors.

What is SSY?

The Sukanya Samriddhi Yojana (SSY) is a government scheme specifically designed for the welfare of girl children. It aims to secure their future by providing a guaranteed return at the time of maturity. The benefits and features of SSY include a 21-year lock-in period, a minimum investment of Rs 250 with a maximum of Rs 1.5 lakh per year. Additionally, the government sets the interest rate every quarter.

As of the quarter ending December 2022, the interest rate for SSY is 8% compounded annually.

PPF vs SSY: A Comparative Analysis

To better understand the differences between PPF and SSY, let's look at the following table:

Parameter PPF SSY Lock-In Period 15 years 21 years Minimum Investment Nil (as part of monthly installments up to Rs 1.5 lakh annually) Rs 250 Maximum Investment Nil (no cap, up to Rs 1.5 lakh per year) Rs 1.5 lakh Interest Rate Currently 7.1% Quarterly varying (8% as of Dec 2022) Objective Retirement corpus building Securing future of girl child

Which One to Choose?

Both PPF and SSY are good investment options that offer tax benefits and are suitable for long-term savings. The choice between the two depends on your specific financial goals:

If you have a girl child and are saving for her future: SSY is a better option as it is specifically designed for the welfare of girl children and offers a guaranteed return at maturity. It also has a longer lock-in period (21 years), which aligns with the long-term financial needs of a child. If you are planning for long-term goals like retirement: PPF is a better fit as it offers a shorter lock-in period (15 years), lower minimum investment, and is easily accessible through post offices across the country.

PPF and SSY both provide financial security and long-term growth, but they cater to different objectives. By understanding the specifics of each scheme, you can make an informed decision based on your personal financial goals.

In Conclusion

Choosing between PPF and SSY depends on your needs and goals. For long-term savings to secure the future of a girl child, SSY is recommended. For individuals focusing on building a retirement corpus, PPF is a more suitable option.

We hope this article helps you make an informed decision. If you learned something new, please UPVOTE and SHARE to help us reach more readers.

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