SIP vs Sukanya Samriddhi Yojana: Which can yields better returns on Rs 1.1 lakh investment over 15 years?

SIP vs Sukanya Samriddhi Yojana: As Indian households increasingly look for long-term savings options, two popular schemes stand out for individuals and families planning financial security — the Sukanya Samriddhi Yojana (SSY) and Systematic Investment Plans (SIP) in mutual funds. With a hypothetical investment of Rs 1.1 lakh over 15 years, investors often ask: which option offers better returns?

Sukanya Samriddhi Yojana: A Government-Backed Savings Scheme

The Sukanya Samriddhi Yojana is a government initiative aimed at securing the fut   ure of girl children. The current interest rate stands at 8.2% per annum, compounded annually, as per the latest revision effective from January 1, 2024.

Key Features:

• Open to parents or legal guardians of girls below 10 years.
• Only one account per girl child; a family can open for up to two girls (exceptions apply for twins/triplets).
• The maximum annual deposit is Rs1.5 lakh; minimum is Rs 250.
• Deposits qualify for tax deductions under Section 80C, and interest earned is tax-free.
• The deposit period is 15 years; the account matures after 21 years.
• Partial withdrawals are allowed after the girl turns 18 or passes 10th grade.

For an investment of Rs 1.1 lakh over 15 years, compounded at 8.2% annually, the SSY could yield returns upwards of ₹3.56 lakh on maturity — assuming the full amount is invested in the first year and left untouched.

Systematic Investment Plan (SIP): Market-Linked Wealth Creation

A Systematic Investment Plan (SIP) is a disciplined way to invest in mutual funds. Instead of making a lump-sum investment, investors put in small amounts regularly — for instance, ₹500 or ₹1,000 per month.

How SIP Works:

Regular contributions are automatically deducted from the investor’s bank account.

Units are allocated based on the Net Asset Value (NAV) on the investment date.

Returns depend on the performance of the underlying mutual fund — typically ranging between 10% and 15% annually over the long term.

Assuming a conservative 12% annual return, an SIP totaling Rs 1.1 lakh over 15 years could grow to approximately Rs 4.4 lakh. The actual amount may vary depending on market conditions and the mutual fund selected.

Which Option Is Better?

While SSY guarantees returns and comes with tax benefits, it is limited to families with girl children and has restrictions on premature withdrawals and usage.

SIP, on the other hand, offers flexibility, potential for higher returns, and broad eligibility, but is market-dependent and lacks guaranteed returns.

If you are looking for guaranteed returns with a focus on your daughter’s future, the Sukanya Samriddhi Yojana is a strong option. However, if your goal is wealth accumulation with higher risk tolerance, then a well-chosen SIP in equity mutual funds could offer better returns over 15 years.

Ultimately, the decision should align with your financial goals, risk appetite, and eligibility.