Sukanya Samriddhi Scheme (SSS) is an investment option if you have a girl child of ten years or below. It gives fixed return of 8.5% per annum. 50% of the withdrawal is allowed only when the girl child turns 18. Investment in SSS is goal specific and the maturity amount is accessible only to the girl child in whose name the account has been opened.
Equity related ELSS mutual funds Equity is a mutual fund that invests your money in stocks. Investment managers invest the money in stock for better returns.. Your equity mutual fund investment is capable of earning 12% to 15% interest on a yearly basis in long term. ELSS mutual funds has 3 years lock-in period and you can withdraw 100% of your money.
Tax on returns:
Sukanya samriddhi Scheme returns on tax free income. It comes in EEE status. you can withdraw funds only to fund your daughter’s education and marriage expenses or to fulfill a medical emergency by submitting written proof. For ELSS mutual funds long term capital gains will be taxed at the rate of 10% without the indexation benefit after one year of investment. After 3 years, it doesn’t have any restriction from redeem the mutual funds investment. It provides better flexibility on withdrawal of investment.
Sukanya samriddhi Scheme returns on tax free income, but don’t have flexibility in withdrawal of money.
Your equity mutual fund investment is market-linked and invested in market. So the returns changes based on market conditions. There is no fixed returns on mutual funds investment. But sukanya samriddhi scheme provides fixed interest earnings and it is offered by the government institutions. This makes it more reliable and safe investment.
Sukanya Samriddhi Scheme provides fixed returns of 8.5%. ELSS mutual funds provide higher returns based on market condition.
ELSS has a minimum lock up period of three years. ELSS has no restriction on withdrawal like sukanya samriddhi scheme. ELSS can be used to generate returns for any financial goal . In long term, it can give better returns than Sukanya Samriddhi Scheme.
Higher returns and high flexibility, ELSS is the scheme for you.
Fixed return and low risk, Sukanya samriddhi Scheme for you.
If you are planning for tax saving, mix both ELSS mutual funds and Sukanya samriddhi scheme. Allocate 50% in each to get best of both, better return with flexibility.