SIP vs SSY: If you invest ₹2,000 per month in Sukanya Samriddhi and an SIP, which one will generate higher returns?
SIP vs. SSY: If you have a young daughter and wish to save ₹2,000 per month for her future, you have two popular options: the Sukanya Samriddhi Yojana (SSY) and a Mutual Fund SIP.
Both aim to build a substantial corpus over the long term, but their approaches differ. One offers a fixed interest rate guaranteed by the government, while the returns on the other depend on market performance.
So, if you invest ₹2,000 every month, which option could yield a larger corpus? Let’s find out.
How much of a corpus can a ₹2,000 SIP generate?
Suppose your daughter is currently 2 years old, and you want to build a substantial fund by the time she turns 23. You invest ₹2,000 per month via SIP for 21 years. Assuming an average annual return of 12%, the outcome would look something like this:
Details | SIP
--- | ---
Monthly Investment | ₹2,000
Investment Tenure | 21 years
Total Investment | ₹5.04 lakh
Estimated Return | 12% per annum
In other words, while you invest only ₹5.04 lakh from your own pocket, the power of compounding could grow the fund to over ₹22 lakh.
How much money will you get from the Sukanya Samriddhi Yojana?
Now, let’s look at the calculations for the Sukanya Samriddhi Yojana. Here, you deposit ₹2,000 per month. Currently, the scheme offers an annual interest rate of 8.2%. In this scenario, the estimated outcome would look like this:
Details | Sukanya Samriddhi Yojana
--- | ---
Monthly Investment | ₹2,000
Deposit Tenure | 15 years
Scheme Maturity | 21 years
Total Investment | ₹3.60 lakh
Current Interest Rate | 8.2% per annum
Estimated Maturity Amount | Approx. ₹9.5–10 lakh*
*This estimate is based on the current interest rate of 8.2%. Interest rates may change in the future.
Why is there such a significant difference between the two?
At first glance, it might appear that the SIP generates much higher returns. However, it is important to understand the reason behind this. In the SIP example, investments are made continuously for 21 years. In contrast, the Sukanya Samriddhi Yojana requires deposits for only 15 years, yet the account matures after 21 years; this means interest continues to accrue during the final six years even without any new deposits.
Secondly, the SIP calculation assumes a 12% return, whereas the Sukanya Yojana calculation uses an 8.2% interest rate. This is the primary factor creating the difference between the two.
Which option should you choose?