Investing in the Indian financial market is a popular way of getting good returns on your savings. It is important, however, to be well-informed about the options available to you before making any investment decisions.
Two popular options for long-term savings that are often compared against each other are the Sukanya Samriddhi Yojana (SSY) and the Public Provident Fund (PPF).
In this article, we will delve into the differences between these two options and how to calculate your potential returns using a SSY calculator or an EPF calculator.
What is Sukanya Samriddhi Yojana (SSY)?
The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme introduced in 2015 to encourage the saving of funds for the future education and marriage expenses of the girl child.
Parents or legal guardians of a girl child under the age of 10 years can open an SSY account with a minimum deposit of Rs 250 and a maximum deposit of Rs 1.5 lakh per financial year. The scheme has a maximum tenure of 21 years, and the account matures when the girl child attains the age of 21 years.
The SSY scheme provides an attractive interest rate of 7.6% (as of April-June 2021), compounded annually and credited directly to the account. This interest rate is subject to change quarterly based on the government’s notifications.
The deposits made towards an SSY account are also eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum limit of Rs 1.5 lakh per financial year.
What is a Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a popular savings scheme introduced by the Government of India in 1968. It was created with the aim of providing retirement benefits to all citizens of the country. Individuals who are residents of India and above the age of 18 years can open a PPF account with a minimum deposit of Rs 500 and a maximum deposit of Rs 1.5 lakh per financial year.
The scheme has a maximum tenure of 15 years, and the deposits made towards the account enjoy a tax exemption under Section 80C of the Income Tax Act, up to a maximum limit of Rs 1.5 lakh per financial year.
The interest rate on the PPF account is set by the government every quarter, and it currently stands at 7.1% (as of April-June 2021), compounded annually and credited directly to the account. The interest rate has historically been higher than that of many other investment options, although this can vary based on the government notifications and prevailing market conditions.
SSY Calculator vs PPF Calculator
To make informed investment decisions, one must have a clear understanding of the potential returns that can be expected from each savings scheme. This is where SSY calculators and PPF calculators can be extremely useful.
A SSY calculator helps parents or guardians of the girl child to compute the interest and maturity value of the investment made towards the SSY account. The calculator takes into account the initial deposit, annual deposits, interest rate, and tenure of the scheme to calculate the final maturity value of the account.
On the other hand, an EPF calculator helps investors to compute the interest and maturity value of the investment made towards the PPF account. The calculator takes into account the initial deposit, annual deposits, interest rate, and tenure of the scheme to calculate the final maturity value of the account.
Comparing SSY vs PPF
Although both the SSY and PPF are government-backed savings schemes that offer tax benefits and attractive interest rates, there are some differences between these schemes that investors should be aware of before making their investment decisions.
The first difference is the interest rate. As of April-June 2021, SSY offers an interest rate of 7.6%, whereas PPF offers an interest rate of 7.1%. Thus, SSY provides a higher interest rate than PPF, and this can be a deciding factor for investors who are looking to get the best returns on their investment.
The second difference is the tenure of the scheme. SSY has a maximum tenure of 21 years, whereas PPF has a maximum tenure of 15 years. This means that investors can invest in the SSY scheme for a longer period, and this can be advantageous for investors who are looking for long-term savings.
The third difference is the age limit for opening the accounts. The SSY account can be opened by parents or legal guardians of a girl child under the age of 10 years. On the other hand, the PPF account can be opened only by resident individuals above the age of 18 years.
Conclusion
When it comes to comparing SSY vs PPF, it is important to note that both the schemes offer attractive returns and tax benefits. However, investors need to carefully evaluate their investment goals and their risk appetite before opting for either of these schemes.
By using an SSY calculator or a PPF calculator, investors can get a clear understanding of the potential returns and plan their investments accordingly. It is also advisable to seek the advice of a financial expert before investing in the Indian financial market.
Disclaimer: The investor must gauge all the pros and cons of trading in the Indian financial market before making any investment decisions. The article aims to provide information for educational purposes only and does not constitute financial or investment advice. The information provided in the article is accurate as of the date of writing, and it may be subject to change based on government notifications and prevailing market conditions.
Summary
Investing in the Indian financial market is a popular way of getting good returns on your savings. Two popular options for long-term savings that are often compared against each other are the Sukanya Samriddhi Yojana (SSY) and the Public Provident Fund (PPF). The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme introduced in 2015 to encourage the saving of funds for the future education and marriage expenses of the girl child. The Public Provident Fund (PPF) is a popular savings scheme introduced by the Government of India in 1968. It was created with the aim of providing retirement benefits to all citizens of the country. Although both the SSY and PPF are government-backed savings schemes that offer tax benefits and attractive interest rates, there are some differences between these schemes that investors should be aware of before making their investment decisions. By using an SSY calculator or a PPF calculator, investors can get a clear understanding of the potential returns and plan their investments accordingly.
