PPF vs SSY account: Both Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are really well-liked savings schemes. They permit you to accumulate a corpus more than a period of time and provide assured tax-free of charge returns. However, an SSY account can be opened only in the name of a girl youngster, whilst anybody can have one PPF account in his/her name.
Wondering which of these two savings schemes is superior for your girl youngster? The right answer to this depends on your requirement as each the schemes have particular positive aspects and disadvantages based on the will need of the account holder. This post explains diverse scenarios in which either of the two schemes may well prove to be superior. Take a look:
Interest price
At present the SSY account is providing a greater interest price at 7.6 per cent, whilst the interest on PPF deposits is just 7.1 per cent.
While comparing the two schemes in terms of interest prices or returns, it is critical to note that the government revises the interest prices of all tiny savings schemes, such as PPF and SSY, on a quarterly basis. Hence, the interest price you see today may well not be the similar, say in the next quarter.
However, ever given that the launch of the scheme for the girl youngster, the government has supplied a greater than PPF interest price on the SSY account. Even when the interest prices on all savings schemes have dipped, SSY continues to offer you a superior interest price than the PPF.
Long term investing
SSY account has to be mandatorily closed immediately after the completion of 21 years of opening. This is not the similar for the PPF account as it can be extended in blocks of 5 years every single for any quantity of instances you want. Literally, one can have a PPF account for his/her complete lifetime!
Hence, if it comes to deciding upon amongst the two schemes, PPF would be a superior selection if you want to accumulate cash for your daughter beyond 21 years. Another, and in all probability the ideal selection, would be to have each PPF and SSY accounts in the name of your daughter. You may well opt for to deposit a big quantity in the SSY account till it is providing a greater interest price and some in the PPF account. So that even immediately after the SSY account is closed immediately after 21 years, you can continue depositing in her PPF account. Or, your daughter can also deposit in the PPF account when she grows up and begins earning cash.
The minimum quantity that you will need to deposit in a PPF account in a year is Rs 500.
One critical point to note right here is that on the maturity of the SSY account, you will face difficulty in re-investing the accumulated quantity in any other tax-free of charge investment scheme. As the maximum quantity you can invest in any scheme (like PPF) for tax-saving beneath Section 80C is Rs 1.5 lakh per year. However, if you will will need the accumulated corpus for other costs like marriage or greater education of your daughter, the SSY savings would turn out to be beneficial.