Investing in a disciplined and structured manner is key to long-term financial growth. Two popular investment options—Systematic Investment Plan (SIP) and Sukanya Samriddhi Yojana (SSY)—offer distinct benefits. Here’s a detailed comparison of how they work and what investors can expect.
Systematic Investment Plan (SIP)
A Systematic Investment Plan (SIP) allows depositors to invest a fixed amount in a mutual fund scheme at regular intervals. Instead of making a one-time investment, investors contribute small amounts over time, which can produce higher returns due to compounding.
How Does SIP Work?
- The chosen investment amount is automatically debited from the depositor’s bank account at a fixed interval.
- The investor receives mutual fund units based on the NAV (Net Asset Value) on the day of investment.
- With each SIP installment, new units are purchased and added to the portfolio, leading to the power of compounding.
- Investors can choose to withdraw returns at the end of the SIP tenure or at periodic intervals.
Example of SIP Investment
An investor can either invest Rs 1,00,000 as a lump sum or opt for an SIP. If they choose to invest through SIP with Rs 500 per month, this amount will be deducted from their bank account automatically on a fixed date every month and invested in the selected mutual fund.
When to Start an SIP?
SIP investments can be started at any time. The key to maximizing returns is to begin as early as possible with a scheme that aligns with long-term financial goals.
SIP Returns on Rs 75,000 per Year for 15 Years
- Monthly Investment: Rs 6,250
- Total Invested Amount: Rs 11,25,000
- Estimated Returns: Rs 18,49,571
- Total Value: Rs 29,74,571
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Account (SSA) is a government-backed savings scheme designed for the financial security of a girl child. It offers tax benefits and a high-interest rate, making it a preferred long-term savings option.
Interest Rate and Deposits
- Interest Rate: 8.2% per annum (compounded yearly, as of January 2024).
- Minimum Deposit: Rs 250 per year.
- Maximum Deposit: Rs 1,50,000 per financial year.
- Deposits: Can be made in lump sum or multiple installments without a limit on the number of deposits.
Who Can Open an SSY Account?
- A guardian can open the account in the name of a girl child below the age of 10 years.
- Only one account is allowed per girl child.
- A maximum of two accounts per family is permitted, except in cases of twin or triplet daughters.
Withdrawal & maturity
- Withdrawals can be made once the girl reaches 18 years of age or completes her 10th standard.
- Up to 50% of the previous financial year’s balance can be withdrawn.
- The account matures after 21 years or at the time of the girl’s marriage (after she turns 18).
SSY Returns on Rs 75,000 per year for 15 years
- Total Investment: Rs 11,25,000
- Total Interest Earned: Rs 23,38,789
- Maturity Value: Rs 34,63,789
SIP vs SSY: Which investment option is better?
Both SIP and SSA cater to different financial goals. SIP is ideal for wealth creation through market-linked returns, while SSA offers guaranteed returns for securing a girl child’s future. Investors should choose based on their risk appetite and financial objectives.
(Disclaimer: Don’t consider this as an investment advice. Do your own due diligence or consult an expert for financial planning)
