Jul 102016
 

Sukanya Yojana Calculation (Random Deposit)

Okay, why do you invest? So that you can earn more in form of interest earnings. Who doesn’t like more income. Nothing is sweeter than money! Now, Sukanya Samriddhi Yojana is one of the best investment options available in market. It offers a decent rate of interest and with a combination of simple and compounded growth rate, the end result of years of investment is always lucrative.

One of the best parts of Sukanya Yojana is that it allows flexible investments and hence, it is not mandatory to go for monthly or yearly or quarterly or half-yearly investments. Once can invest anytime during the year as long as the conditions of maximum number of allowed investments a year and maximum investment in a single year are not breached. Simply put, the scheme allows random investments. But how does a random investment work? This works exactly the same way in which monthly or yearly or any other form of investment works except that the fluctuations in interest earnings because of randomized investments are more. This may lead to lower maturity value or greater maturity value. We will explore the condition in the simple numerical example we will lay down in this article. But for the purpose of doing so, we will make a few assumptions:

  • Interest rate remains fixed for entire account tenure of 21 years. Currently the interest offered is 8.6% and hence, we will use that in this example.
  • We will assume that though the investor invests at different points in time throughout the year, the yearly investment will never cross INR 50,000 (remember, it is an assumption and hence, the aggregate investment amount may be greater than or lower than INR 50,000).
  • The investor doesn’t apply for premature withdrawal.
  • The account stays active for full 21 years.
  • The investor invests for 14 years (maximum allowed).
  • The investor never defaults on yearly investments. He always makes the minimum required investment in the account every year.

For the sake of simplicity, we will consider that the invests 5 times a year on the exact same months. However, this may not be true.

Example of Sukanya Yojana calculation with random deposit

Here:

Yearly interest: 8.6%

Monthly interest: 0.7% (approximation)

Aggregate yearly investment: INR 50,000 but made in 5 installments.

Year 1
Month Deposit Balance Interest
Apr 10,000 10,000 72
May 10,000 72
Jun 10,000 72
Jul 10,000 72
Aug 20,000 30,000 215
Sep 30,000 215
Oct 5,000 35,000 251
Nov 35,000 251
Dec 10,000 45,000 323
Jan 45,000 323
Feb 5,000 50,000 358
Mar 50,000 358
Year End Balance 52,580 2,580

 

Year 2
Month Deposit Balance Interest
Apr 10,000 62,580 448
May 62,580 448
Jun 62,580 448
Jul 62,580 448
Aug 20,000 82,580 592
Sep 82,580 592
Oct 5,000 87,580 628
Nov 87,580 628
Dec 10,000 97,580 699
Jan 97,580 699
Feb 5,000 102,580 735
Mar 102,580 735
Year End Balance 109,682 7,102

 

Year 3
Month Deposit Balance Interest
Apr 10,000 119,682 858
May 119,682 858
Jun 119,682 858
Jul 119,682 858
Aug 20,000 139,682 1,001
Sep 139,682 1,001
Oct 5,000 144,682 1,037
Nov 144,682 1,037
Dec 10,000 154,682 1,109
Jan 154,682 1,109
Feb 5,000 159,682 1,144
Mar 159,682 1,144
Year End Balance 171,695 12,013

 

Year 4
Month Deposit Balance Interest
Apr 10,000 181,695 1,302
May 181,695 1,302
Jun 181,695 1,302
Jul 181,695 1,302
Aug 20,000 201,695 1,445
Sep 201,695 1,445
Oct 5,000 206,695 1,481
Nov 206,695 1,481
Dec 10,000 216,695 1,553
Jan 216,695 1,553
Feb 5,000 221,695 1,589
Mar 221,695 1,589
Year End Balance 239,040 17,346

 

Year 5
Month Deposit Balance Interest
Apr 10,000 249,040 1,785
May 249,040 1,785
Jun 249,040 1,785
Jul 249,040 1,785
Aug 20,000 269,040 1,928
Sep 269,040 1,928
Oct 5,000 274,040 1,964
Nov 274,040 1,964
Dec 10,000 284,040 2,036
Jan 284,040 2,036
Feb 5,000 289,040 2,071
Mar 289,040 2,071
Year End Balance 312,178 23,137

 

Year 6
Month Deposit Balance Interest
Apr 10,000 322,178 2,309
May 322,178 2,309
Jun 322,178 2,309
Jul 322,178 2,309
Aug 20,000 342,178 2,452
Sep 342,178 2,452
Oct 5,000 347,178 2,488
Nov 347,178 2,488
Dec 10,000 357,178 2,560
Jan 357,178 2,560
Feb 5,000 362,178 2,596
Mar 362,178 2,596
Year End Balance 391,605 29,427

 

Year 7
Month Deposit Balance Interest
Apr 10,000 401,605 2,878
May 401,605 2,878
Jun 401,605 2,878
Jul 401,605 2,878
Aug 20,000 421,605 3,022
Sep 421,605 3,022
Oct 5,000 426,605 3,057
Nov 426,605 3,057
Dec 10,000 436,605 3,129
Jan 436,605 3,129
Feb 5,000 441,605 3,165
Mar 441,605 3,165
Year End Balance 477,863 36,258

 

Year 8
Month Deposit Balance Interest
Apr 10,000 487,863 3,496
May 487,863 3,496
Jun 487,863 3,496
Jul 487,863 3,496
Aug 20,000 507,863 3,640
Sep 507,863 3,640
Oct 5,000 512,863 3,676
Nov 512,863 3,676
Dec 10,000 522,863 3,747
Jan 522,863 3,747
Feb 5,000 527,863 3,783
Mar 527,863 3,783
Year End Balance 571,539 43,676

 

Year 9
Month Deposit Balance Interest
Apr 10,000 581,539 4,168
May 581,539 4,168
Jun 581,539 4,168
Jul 581,539 4,168
Aug 20,000 601,539 4,311
Sep 601,539 4,311
Oct 5,000 606,539 4,347
Nov 606,539 4,347
Dec 10,000 616,539 4,419
Jan 616,539 4,419
Feb 5,000 621,539 4,454
Mar 621,539 4,454
Year End Balance 673,272 51,732

 

Year 10
Month Deposit Balance Interest
Apr 10,000 683,272 4,897
May 683,272 4,897
Jun 683,272 4,897
Jul 683,272 4,897
Aug 20,000 703,272 5,040
Sep 703,272 5,040
Oct 5,000 708,272 5,076
Nov 708,272 5,076
Dec 10,000 718,272 5,148
Jan 718,272 5,148
Feb 5,000 723,272 5,183
Mar 723,272 5,183
Year End Balance 783,753 60,481

 

Year 11
Month Deposit Balance Interest
Apr 10,000 793,753 5,689
May 793,753 5,689
Jun 793,753 5,689
Jul 793,753 5,689
Aug 20,000 813,753 5,832
Sep 813,753 5,832
Oct 5,000 818,753 5,868
Nov 818,753 5,868
Dec 10,000 828,753 5,939
Jan 828,753 5,939
Feb 5,000 833,753 5,975
Mar 833,753 5,975
Year End Balance 903,736 69,983

 

Year 12
Month Deposit Balance Interest
Apr 10,000 913,736 6,548
May 913,736 6,548
Jun 913,736 6,548
Jul 913,736 6,548
Aug 20,000 933,736 6,692
Sep 933,736 6,692
Oct 5,000 938,736 6,728
Nov 938,736 6,728
Dec 10,000 948,736 6,799
Jan 948,736 6,799
Feb 5,000 953,736 6,835
Mar 953,736 6,835
Year End Balance 1,034,037 80,301

 

Year 13
Month Deposit Balance Interest
Apr 10,000 1,044,037 7,482
May 1,044,037 7,482
Jun 1,044,037 7,482
Jul 1,044,037 7,482
Aug 20,000 1,064,037 7,626
Sep 1,064,037 7,626
Oct 5,000 1,069,037 7,661
Nov 1,069,037 7,661
Dec 10,000 1,079,037 7,733
Jan 1,079,037 7,733
Feb 5,000 1,084,037 7,769
Mar 1,084,037 7,769
Year End Balance 1,175,544 91,507

 

Year 14
Month Deposit Balance Interest
Apr 10,000 1,185,544 8,496
May 1,185,544 8,496
Jun 1,185,544 8,496
Jul 1,185,544 8,496
Aug 20,000 1,205,544 8,640
Sep 1,205,544 8,640
Oct 5,000 1,210,544 8,676
Nov 1,210,544 8,676
Dec 10,000 1,220,544 8,747
Jan 1,220,544 8,747
Feb 5,000 1,225,544 8,783
Mar 1,225,544 8,783
Year End Balance 1,329,221 103,677

 

Year 15
Month Deposit Balance Interest
Apr 0 1,329,221 9,526
May 0 1,329,221 9,526
Jun 0 1,329,221 9,526
Jul 0 1,329,221 9,526
Aug 0 1,329,221 9,526
Sep 0 1,329,221 9,526
Oct 0 1,329,221 9,526
Nov 0 1,329,221 9,526
Dec 0 1,329,221 9,526
Jan 0 1,329,221 9,526
Feb 0 1,329,221 9,526
Mar 0 1,329,221 9,526
Year End Balance 1,443,534 114,313

 

Year 16
Month Deposit Balance Interest
Apr 0 1,443,534 10,345
May 0 1,443,534 10,345
Jun 0 1,443,534 10,345
Jul 0 1,443,534 10,345
Aug 0 1,443,534 10,345
Sep 0 1,443,534 10,345
Oct 0 1,443,534 10,345
Nov 0 1,443,534 10,345
Dec 0 1,443,534 10,345
Jan 0 1,443,534 10,345
Feb 0 1,443,534 10,345
Mar 0 1,443,534 10,345
Year End Balance 1,567,678 124,144

 

Year 17
Month Deposit Balance Interest
Apr 0 1,567,678 11,235
May 0 1,567,678 11,235
Jun 0 1,567,678 11,235
Jul 0 1,567,678 11,235
Aug 0 1,567,678 11,235
Sep 0 1,567,678 11,235
Oct 0 1,567,678 11,235
Nov 0 1,567,678 11,235
Dec 0 1,567,678 11,235
Jan 0 1,567,678 11,235
Feb 0 1,567,678 11,235
Mar 0 1,567,678 11,235
Year End Balance 1,702,498 134,820

 

Year 18
Month Deposit Balance Interest
Apr 0 1,702,498 12,201
May 0 1,702,498 12,201
Jun 0 1,702,498 12,201
Jul 0 1,702,498 12,201
Aug 0 1,702,498 12,201
Sep 0 1,702,498 12,201
Oct 0 1,702,498 12,201
Nov 0 1,702,498 12,201
Dec 0 1,702,498 12,201
Jan 0 1,702,498 12,201
Feb 0 1,702,498 12,201
Mar 0 1,702,498 12,201
Year End Balance 1,848,913 146,415

 

Year 19
Month Deposit Balance Interest
Apr 0 1,848,913 13,251
May 0 1,848,913 13,251
Jun 0 1,848,913 13,251
Jul 0 1,848,913 13,251
Aug 0 1,848,913 13,251
Sep 0 1,848,913 13,251
Oct 0 1,848,913 13,251
Nov 0 1,848,913 13,251
Dec 0 1,848,913 13,251
Jan 0 1,848,913 13,251
Feb 0 1,848,913 13,251
Mar 0 1,848,913 13,251
Year End Balance 2,007,920 159,007

 

Year 20
Month Deposit Balance Interest
Apr 0 2,007,920 14,390
May 0 2,007,920 14,390
Jun 0 2,007,920 14,390
Jul 0 2,007,920 14,390
Aug 0 2,007,920 14,390
Sep 0 2,007,920 14,390
Oct 0 2,007,920 14,390
Nov 0 2,007,920 14,390
Dec 0 2,007,920 14,390
Jan 0 2,007,920 14,390
Feb 0 2,007,920 14,390
Mar 0 2,007,920 14,390
Year End Balance 2,180,601 172,681

 

Year 21
Month Deposit Balance Interest
Apr 0 2,180,601 15,628
May 0 2,180,601 15,628
Jun 0 2,180,601 15,628
Jul 0 2,180,601 15,628
Aug 0 2,180,601 15,628
Sep 0 2,180,601 15,628
Oct 0 2,180,601 15,628
Nov 0 2,180,601 15,628
Dec 0 2,180,601 15,628
Jan 0 2,180,601 15,628
Feb 0 2,180,601 15,628
Mar 0 2,180,601 15,628
Year End Balance 2,368,132 187,532

In the above example we notice that the investment amount never crosses INR 50,000 a year and it is invested in 5 installments. The investor can actually invest more number of times if desired or in different months than as shown in the example.

What we wanted to show here is that with investments broken down into smaller amounts at random points in time, the total maturity value is lesser than the maturity value that is attained when INR 50,000 is invested at once at the beginning of the year (please refer to our example of yearly deposits).

This decline in maturity value happens here because of the variations in interest earnings. The maturity amount will actually depend on a number of factors like:

  • Frequency of investment.
  • Actual amount invested (even if invested randomly).
  • Prevailing interest rate (interest rate will change every quarter).

Also, since there is an option of compounded growth once every year, the amount invested at the beginning of the fiscal year will make a major difference. The bigger the amount invested, the bigger will be the compounded growth. This will then reflect in bigger interest earnings every subsequent month because the first investment will determine the overall size of the account balance.

Even in this case, you will notice that the overall investment grows by about 3.4 times. This is quite a significant growth and since Sukanya Samriddhi Yojana is government backed, it will be very safe!

In case you want to do experiments with different investment amount at different times during the year, feel free to download the excel calculator and change the investment values or interest rate value to see how it will work.

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