Among the various investment instruments that provide assured returns to investors, the bank fixed deposits, NSC (National Saving Certificate), and PMOIS, are the best. However, there are very few investment options that let you secure your child’s future.
The Sukanya Samriddhi Yojana was launched by the Government of India in 2015. This scheme allows parents to start investing for their girl child from an early age. Bank FDs are also one of the most preferred investment options in India. Although they are quite distinct, both bank FDs and SSY can be used to secure the future of your girl child.
Now, let us compare both these schemes based on their features:
Account opening
To open a bank fixed deposit account, you should visit their nearest branch. Some banks even provide online account opening facility to their customers.
Sukanya Samriddhi Yojana online account opening facility is not available as the account can be opened only by visiting the nearest post office or authorized bank before the girl child reaches the age of 10.
Lock-in period
Bank FDs allow investors to choose a lock-in period as per their convenience. You can invest your savings for a period between 12 and 60 months. If you wish to withdraw the FD before maturity, then you will have to pay a fine as a penalty.
There is no such facility when you choose Sukanya Samriddhi Yojana as you can keep investing till your girl child turns 21. Moreover, you can withdraw the deposited amount partially when the girl turns 18 and that also only for her higher educational expenses.
Auto-renewal
If you do not withdraw a bank FD even after maturity, then the bank might deposit it in your account or renew the fixed deposit, especially if you fail to respond even after repeated attempts.
SSY scheme provides only a one-time investment for one girl, and therefore there is no question of auto-renewal. The complete deposited amount can be withdrawn only after completion of 21 years or if the girl marries before 21 years of age.
Taxation
The interest earned by investing in SSY scheme is exempted from taxes, whereas interest earned through bank FDs is taxable. Therefore, bank FDs are ideal for meeting your short term financial plans, whereas SSY is ideal for planning long term goals for your girl child.
However, there are many banks and finance companies that are offering tax-saving FDs as well.
Bank FDs or SSY: Which one is better?
The interest rates of bank FDs are not at par if we compare them with the interest rate of SSY scheme, which is 8.50% at present. However, if you wish to avail a high-interest rate on your deposits, then you can certainly think of Bajaj Finance FDs that are providing interest rates up to 8.95 percent. You can open a child FD with Bajaj Finance that offers an interest rate of 8.60%, which is still higher than the SSY interest rate.
Online procedure
You can also open an FD account through the online portal of Bajaj Finance. Moreover, you can check their Online Fixed Deposit calculator to check details about the interest rates and returns offered by their latest FD schemes.
Extra interest on FD renewal
Bajaj Finance FD proves to be a better option for investors as it not only lets you know about the maturity date well in advance but also provides you an extra interest rate of 0.10 percent if you decide to re-invest your FD returns. Therefore, you can think of long term investments for your child’s future by opting for these FDs.
Interest payouts
A better option than bank FDs is corporate fixed deposits offered by finance companies like Bajaj Finance. These fixed deposits not only allow investors to choose the tenor but also allow them to choose monthly, six-monthly, quarterly or yearly interest payouts as per their convenience. These payouts can be used to cover school fees and other expenses of your child. Bajaj Finance FD also offers a multi-deposit facility wherein you can invest a single lumpsum amount in different FD schemes with varying tenors to meet your urgent cash requirements. Moreover, credit ratings of FAAA/stable by CRISIL and MAA/stable by ICRA make them a safe & Smart investment option for your child’s future.