Government backed Sukanya Samriddhi Yojana (SSY) is targeted towards a girl child and her financial needs like education and marriage.
However, because the exact age at which she would require the funds is uncertain, the scheme tries to be flexible.
The investors, on the opposite hand, got to confine mind five important years or time spans before investing in SSY. Consider, as an example , the girl child’s age, and therefore the time left for her education and marriage.
Opening an account (0-10 years)
An SSY account can only be opened within the name of a woman child (beneficiary) below 10 years, as on the date of the opening of the account.
The date of birth proof is, therefore, essential. the principles leave the opening of a maximum of two accounts for 2 girls during a family. One can’t open two accounts for one girl.
The girl child’s age is extremely important to seek out out the duration of the scheme. Here’s why:
5 years
The request for the primary premature closure of an SSY account are often suggests after the completion of 5 years of the account opening.
That too, as per the principles, on extreme compassionate grounds like medical support in life-threatening diseases.
Still if the account has got to be closed for an additional reason, it’ll be allowed, but the whole deposit will only get interest of a Post Office Savings checking account .
10 years
When the beneficiary, i.e., the girl child crosses the age of 10, she will operate the account on her own. she will make any future contributions to her own account. the oldsters, too, can still deposit within the same account.
15 years
To open an SSY account, a minimum initial deposit of Rs 250 ( Earlier it had been Rs 1,000) is required. Thereafter, a minimum of Rs 250 ( Earlier it had been Rs 1,000) up to a maximum of Rs 1.5 lakh are often deposited within the account annually.
To stay the account active, deposits got to be made just for the initial 15 years. For a 9-year-old, deposits need to continue till the kid turns 24. From ages 24 to 30 (when the account matures), the account activly earns interest on the investment account.
SSY may be a long-term investment scheme. The partial and full withdrawal window is sacrosanct subject to applications made to foreclose the account prematurely.
18 years
The next window for withdrawals is allowed when the girl turns 18. and therefore the rules make it clear that the funds are for her needs and not used for the other purpose.
A maximum of fifty per cent of the account balance of the preceding year could also be withdrawn for the aim of upper education of the girl.
For this, beneficiary needs to submit an application with the supporting documents of admission of a college or a fee slip from such college as larifyinga proof of admission for which such financial requirement is required.
Further, the withdrawal amount are going to be restricted to the particular demand of fee and other charges required at the time of admission as shown on the admission letter or the relevant fee slip issued by the college.
21 years
Irrespective of the age, the SSY account will run 21 years from the date of its opening. So if the girl child’s age is 8, the scheme will mature when she will turn 30.
however the norm for premature closure anytime before 21 years of girl age if the parent submits an application for such premature closure for the purpose of her daughter’s marriage and confirms through an affidavit that the applicant isn’t below 18 years of age on the date of marriage.
At times, this might be a roadblock because the closure is subject to conditions as seen above.
The attractiveness
SSY carries the very best tax-free return with sovereign guarantee and comes with the exempt-exempt-exempt (EEE) status. The annual deposit (contributions) qualifies for Section 80C benefit and therefore the maturity benefits are non-taxable.
SSY are often opened during a post office or a bank. One also can make deposits through electronic means, i.e., e-transfer to the concerned post office or bank if either has access to the core banking facility.
Alternative investments
SSY may be a dedicated scheme for a woman child’s needs. Public Provident Fund (PPF), a 15-year scheme that also comes with loan and partial withdrawals facilities, are often an alternate . Although a PPF account are often extended in block of 5 years after the initial 15 years, the likelihood of funds getting used for other purposes exists.
As per the rules – At any point of your time, the rate of interest of SSY will always be above that of PPF. For both schemes, the govt fixes the rate of interest on quarterly basis supported the G-sec yields.
The rate of interest and spread that SSY enjoys over the G-sec rate of comparable maturity is 75 basis points compared to PPF’s 25.
Currently, (01.10.2018 to 31.12.2018 ) the rate of interest of SSY is 8.5 per cent once a year compounded annually, while it’s 8 per cent once a year for PPF.
Mark the date in SSY as there’ll not be any interest on the quantity deposited after the 10th for that specific month. Even in comparison to traditional life assurance plans, SSY scores higher, especially when combined with a insurance plan.
Conclusion
Estimate what proportion inflated-adjusted funds would be needed for the education and marriage of the girl child. SSY may be a debt investment, therefore, for a long-term need, relying more on equities helps.
One may use it to take a position some of the funds earmarked for the girl child’s needs and not entirely depend upon it.
This could apply even to those that have exhausted their annual Section 80C limit of Rs 1.5 lakh.
With this,buy a pure insurance like term insurance to supply adequate life cover to the financial dependents.
Likewise, for younger kids, the time duration for accumulating funds would be more compared to those nearing 10 years, but still SSY are often a part of one’s portfolio undoubtedly.