Public Provident Fund vs Sukanya Samriddhi Yojana


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What is a PPF Account?

PPF account, also known as the Public Provident Fund scheme, is one of the most popular long-term saving-cumulative-investment products, owing to its combination of safety, returns, and tax advantages.

The PPF was introduced to the public in 1968 by the Finance Ministry’s National Savings Institute. Since then, it has emerged as a potent tool for generating long-term wealth for investors.

Investors use the PPF as a tool to build a corpus for their retirement by putting money aside on a regular basis over long periods of time (PPF has a 15-year maturity, and the facility to extend the tenure). The PPF is a popular choice among small savers due to its attractive interest rates and tax advantages.

What is a SSY Account?

Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme for the girl child that is part of the “Beti Bachao, Beti Padhao Yojana.” Parents can open up to two such accounts for their daughters (if they have more than two daughters, they cannot open a third/fourth account, etc.). These accounts are valid for 21 years or until the girl child reaches the age of 18. The Ministry of Finance has authorised ICICI Bank to provide SSY Accounts. Customers can open an account at any ICICI Bank branch by submitting account opening documents.

Key differences

Despite the fact that they are government-owned investment schemes, these accounts differ in a variety of ways:

  • While the Sukanya Samridhi Yojana account is opened in the name of the girl child by the parents, the PPF account can be opened by any Indian citizen.
  • The rate of interest for both fluctuates because they are linked to government security and are reviewed every quarter. The current ROI in SSY is 8.4 percent, with the calculation based on the account balance in the 10th and the end of the day in the month. So, in the case of SSY, investments should be made before the 10th of each month.

On the other hand, the current year’s offered ROI in PPF is 7.9 percent, with the calculation based on the lowest balance available in the account from the 5th to the last day of the month.

  • In the case of deposits, the schemes differ as well. To open an account with SSY, a minimum deposit of Rs 250 is required. In the case of PPF, it is Rs 500. The maximum limit for both schemes, however, is the same, i.e. Rs 1.5 lakh.
  • Both of these schemes are distinct in terms of maturity. The maturity period for SSY is 21 years, whereas the PPF account maturity period is 15 years.
  • Sukanya Samriddhi Yojana Account allows partial withdrawals up to 50% of the total balance in the account once the girl child reaches the age of 18. In the case of PPF, after 5 years from the date of account opening, one can withdraw up to 50% of the account balance.
  • PPF accounts include a nominee option, which is not available with the Sukanya Samridhi Yojana.
  • In the case of SSY, a maximum of two accounts can be opened, one for each girl child. However, a person can only open one PPF account.

Conclusion — Which is better?

It’s a difficult question to answer because each has its own set of features and benefits that suit different people. SSY is beneficial for parents who have a girl child and want to provide a secure future for her. Furthermore, in terms of current ROI, SSY outperforms PPF by 0.5 percent. Again, the decision is entirely yours. PPF provides adequate flexibility, while SSY provides higher returns. Analyze your requirements first, then choose the option that best fits your budget and goals.

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