There are many investment options available to help you secure your daughter's financial future. This blog will focus on the Sukanya Samriddhi Yojana government-backed scheme, as well as children's mutual funds plans that are gradually gaining popularity. So that you can make an informed decision, we will be comparing the pros and cons of each under certain conditions. Continue reading!
As part of a campaign against declining child sex ratios in India, the Government of India introduced the Sukanya Samridhi Yajana (SSY), a comprehensive savings plan. The 2011 population census showed that India's child-sex ratio was 919. This is lower than the 927 in 2001.
The government created several financial and social schemes to address the problem of decreasing child sex ratio under the "Beti Bachao Beti Padhao Campaign". SSY aims to provide financial assistance for a girl child's higher educational and marriage.
SSY offers parents the opportunity to build a substantial corpus for their future girl child's finances. However, it only allows for limited returns on investment. This is why it may not be the best investment option for a girl child from India.
To maximize the benefits of Children Mutual Funds, parents may also look into other options.
Before we get into Sukanya Samriddhi Yojana vs Children Mutual Funds, which is the best scheme to create a corpus of support for a girl child, we need to be able to fully understand the differences between each scheme and the benefits.
These are some of its key features and benefits.
Let's now look at the characteristics of Children Mutual Funds. How do they differ from SSY?
Children's gift funds and children's mutual funds are two types of schemes that allow investments to be made in the child's name. This scheme allows parents or legal guardians to invest on behalf of their children. The mutual funds' gains can be used to finance expenses such as higher education and marriage.
These gift mutual funds for children are classified as either underbalanced or hybrid mutual funds.
These mutual funds can be further divided into either debt-oriented or equity-oriented hybrid Mutual Funds. Equity-oriented Mutual Funds have more than 60% equity exposure, while those with more than 60% debt exposure are called debt-oriented Mutual Funds.
These mutual funds offer many benefits and features. -
These solution-oriented schemes often offer a variety of investment options to suit different risk profiles. Conservative investors have the option to choose a lower debt portion and a greater equity portion, while aggressive investors can opt for a higher portion of the equity. If you are able to tolerate moderate to high risk and have a long-term horizon, the alternative to child plans is to invest in diversified equity portfolios for higher returns.
Fund houses such as Axis mutual funds and HDFC mutual funds, ICICI Mutual funds, ICICI mutual funds, and SBI funds, ICICI mutual funds, ICICI mutual fundS, ICICI mutual funds, UTI mutual funds, and TATA mutual fundS have child plans. The average returns hover around 8-10% depending on whether they are conservative or aggressive.
These children's gift Mutual Funds can not only be used to provide financial support for a girl's education or marriage, but they also have many other benefits. These Mutual Funds are, just like SSY, and provide a great way to build a fund for a girl's financial needs.
There are many advantages to each option when it comes down to choosing which one is better for building a corpus.
Below is a table that compares the two schemes based on their features.
|Particulars||Sukanya Samriddhi Yojana||Children Mutual Funds|
|Account operation||A girl's guardian or parent can open the account. The beneficiary is responsible for the operation once she reaches 18 years old.||These Mutual Funds can be invested by parents or legal guardians for their children. The lock-in period is typical until the child reaches 18 years.|
|Returns||This investment earns 8.4% interest and can provide moderate to high returns.||These Mutual Funds, particularly equity-oriented ones, help investors maximize their investment returns.|
|Limitations||A family may only have two SSY accounts.||This scheme does not have any limitations.|
|Minimum deposit||A minimum deposit of Rs. 250 is required for investors. 250, and a maximum deposit limit of Rs. 1.5 Lakh per financial year||These Mutual Funds have no limitations, which makes them better than Sukanya Sanghi Yojana.|
|Risques||SSY investments are risk-free and offer stable returns.||Mutual funds, particularly equity-oriented ones, come with the same risks as the money market. Before investing, investors need to know their risk appetite.|
Both SSY and Children Mutual Funds offer their own advantages. Child gift plans offer greater returns than SSY, which is exempt from tax and is backed up by the government. Child plans include a lock-in (scheme dependent) which can help you to instill financial discipline and plan for your future. If you are able to manage your risk and have a time horizon, you may be able to invest in pure equity portfolios to help your child meet their future financial needs. It is a good idea to evaluate your risk tolerance and the time frame within which you plan to accumulate the corpus before making a decision. You can combine the investable corpus from both schemes to create a balanced portfolio. You should carefully weigh the pros and cons of each option and choose the one that is best for your daughter.
Best Wishes For Investing and Good Luck For the Future!
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