Jul 212016
 

Sukanya Yojana Calculation (Yearly Deposit)

We will deliberately skip the intro part where we say a few words about Sukanya Samriddhi Yojana. We know that you are already aware of those stuff. So, we will no further bug you with the details or the summary. What we are interested in here is to know how yearly deposits work. Alternately, we can rephrase the question as: “if we deposit say, INR 50,000 a year, what will be the amount we get at maturity?” Isn’t that the thing you are most interested about? Of course you are! Everyone wants to know the absolute growth in invested money upon maturity.

We will take a look at this using a numerical example. For the purpose of setting up the example, we need to make a few assumptions. Why assumptions? That’s because it is literally not possible to include everything in a numerical example. The government keeps changing terms and conditions of the Yojana and hence, updating every single thing in a single numerical example will make the example extremely complex. We want to avoid complexity and give you an easy-to-understand illustration. You can keep changing a few parameters to include the changes the government comes up with over time.

So, here are the assumptions:

  • The interest rate for the Yojana is fixed at 8.60% yearly. It is not changed throughout the scheme tenure (simply put, we are excluding the feature where government changes the interest rate every quarter but we are working with the current offered rate of 8.60% yearly).
  • There are no withdrawal requests prematurely.
  • Investments are made only once every year at the beginning of the fiscal year.
  • No more than INR 50,000 is invested in a year.
  • All 14 years of investments are made.
  • The account naturally closes at the end of 21 years from the date when the account was opened. That is, the account runs its full course and completes the tenure.
  • The account doesn’t go dormant even once during the full tenure and hence, no penalties are attracted for reactivation of the account.

Now that we have the assumptions in place, let us take a look at the numerical example that will explain how the yearly investments grow under this scheme.

An example of Sukanya Yojana calculation with yearly deposit

In the example below:

Yearly interest: 8.6%

Monthly interest: 0.7% (approximately). We will use monthly interest value for interest calculations every month.

Yearly deposit: INR 50,000 – deposited at the beginning of every financial year.

Year 1
Month Deposit Balance Interest
Apr 50,000 50,000 358
May 50,000 358
Jun 50,000 358
Jul 50,000 358
Aug 50,000 358
Sep 50,000 358
Oct 50,000 358
Nov 50,000 358
Dec 50,000 358
Jan 50,000 358
Feb 50,000 358
Mar 50,000 358
Year End Balance 54,300 4,300

 

Year 2
Month Deposit Balance Interest
Apr 50,000 104,300 747
May 104,300 747
Jun 104,300 747
Jul 104,300 747
Aug 104,300 747
Sep 104,300 747
Oct 104,300 747
Nov 104,300 747
Dec 104,300 747
Jan 104,300 747
Feb 104,300 747
Mar 104,300 747
Year End Balance 113,270 8,970

 

Year 3
Month Deposit Balance Interest
Apr 50,000 163,270 1,170
May 163,270 1,170
Jun 163,270 1,170
Jul 163,270 1,170
Aug 163,270 1,170
Sep 163,270 1,170
Oct 163,270 1,170
Nov 163,270 1,170
Dec 163,270 1,170
Jan 163,270 1,170
Feb 163,270 1,170
Mar 163,270 1,170
Year End Balance 177,311 14,041

 

Year 4
Month Deposit Balance Interest
Apr 50,000 227,311 1,629
May 227,311 1,629
Jun 227,311 1,629
Jul 227,311 1,629
Aug 227,311 1,629
Sep 227,311 1,629
Oct 227,311 1,629
Nov 227,311 1,629
Dec 227,311 1,629
Jan 227,311 1,629
Feb 227,311 1,629
Mar 227,311 1,629
Year End Balance 246,860 19,549

 

Year 5
Month Deposit Balance Interest
Apr 50,000 296,860 2,127
May 296,860 2,127
Jun 296,860 2,127
Jul 296,860 2,127
Aug 296,860 2,127
Sep 296,860 2,127
Oct 296,860 2,127
Nov 296,860 2,127
Dec 296,860 2,127
Jan 296,860 2,127
Feb 296,860 2,127
Mar 296,860 2,127
Year End Balance 322,390 25,530

 

Year 6
Month Deposit Balance Interest
Apr 50,000 372,390 2,669
May 372,390 2,669
Jun 372,390 2,669
Jul 372,390 2,669
Aug 372,390 2,669
Sep 372,390 2,669
Oct 372,390 2,669
Nov 372,390 2,669
Dec 372,390 2,669
Jan 372,390 2,669
Feb 372,390 2,669
Mar 372,390 2,669
Year End Balance 404,415 32,026

 

Year 7
Month Deposit Balance Interest
Apr 50,000 454,415 3,257
May 454,415 3,257
Jun 454,415 3,257
Jul 454,415 3,257
Aug 454,415 3,257
Sep 454,415 3,257
Oct 454,415 3,257
Nov 454,415 3,257
Dec 454,415 3,257
Jan 454,415 3,257
Feb 454,415 3,257
Mar 454,415 3,257
Year End Balance 493,495 39,080

 

Year 8
Month Deposit Balance Interest
Apr 50,000 543,495 3,895
May 543,495 3,895
Jun 543,495 3,895
Jul 543,495 3,895
Aug 543,495 3,895
Sep 543,495 3,895
Oct 543,495 3,895
Nov 543,495 3,895
Dec 543,495 3,895
Jan 543,495 3,895
Feb 543,495 3,895
Mar 543,495 3,895
Year End Balance 590,235 46,741

 

Year 9
Month Deposit Balance Interest
Apr 50,000 640,235 4,588
May 640,235 4,588
Jun 640,235 4,588
Jul 640,235 4,588
Aug 640,235 4,588
Sep 640,235 4,588
Oct 640,235 4,588
Nov 640,235 4,588
Dec 640,235 4,588
Jan 640,235 4,588
Feb 640,235 4,588
Mar 640,235 4,588
Year End Balance 695,296 55,060

 

Year 10
Month Deposit Balance Interest
Apr 50,000 745,296 5,341
May 745,296 5,341
Jun 745,296 5,341
Jul 745,296 5,341
Aug 745,296 5,341
Sep 745,296 5,341
Oct 745,296 5,341
Nov 745,296 5,341
Dec 745,296 5,341
Jan 745,296 5,341
Feb 745,296 5,341
Mar 745,296 5,341
Year End Balance 809,391 64,095

 

Year 11
Month Deposit Balance Interest
Apr 50,000 859,391 6,159
May 859,391 6,159
Jun 859,391 6,159
Jul 859,391 6,159
Aug 859,391 6,159
Sep 859,391 6,159
Oct 859,391 6,159
Nov 859,391 6,159
Dec 859,391 6,159
Jan 859,391 6,159
Feb 859,391 6,159
Mar 859,391 6,159
Year End Balance 933,299 73,908

 

Year 12
Month Deposit Balance Interest
Apr 50,000 983,299 7,047
May 983,299 7,047
Jun 983,299 7,047
Jul 983,299 7,047
Aug 983,299 7,047
Sep 983,299 7,047
Oct 983,299 7,047
Nov 983,299 7,047
Dec 983,299 7,047
Jan 983,299 7,047
Feb 983,299 7,047
Mar 983,299 7,047
Year End Balance 1,067,862 84,564

 

Year 13
Month Deposit Balance Interest
Apr 50,000 1,117,862 8,011
May 1,117,862 8,011
Jun 1,117,862 8,011
Jul 1,117,862 8,011
Aug 1,117,862 8,011
Sep 1,117,862 8,011
Oct 1,117,862 8,011
Nov 1,117,862 8,011
Dec 1,117,862 8,011
Jan 1,117,862 8,011
Feb 1,117,862 8,011
Mar 1,117,862 8,011
Year End Balance 1,213,999 96,136

 

Year 14
Month Deposit Balance Interest
Apr 50,000 1,263,999 9,059
May 1,263,999 9,059
Jun 1,263,999 9,059
Jul 1,263,999 9,059
Aug 1,263,999 9,059
Sep 1,263,999 9,059
Oct 1,263,999 9,059
Nov 1,263,999 9,059
Dec 1,263,999 9,059
Jan 1,263,999 9,059
Feb 1,263,999 9,059
Mar 1,263,999 9,059
Year End Balance 1,372,703 108,704

 

Year 15
Month Deposit Balance Interest
Apr 0 1,372,703 9,838
May 0 1,372,703 9,838
Jun 0 1,372,703 9,838
Jul 0 1,372,703 9,838
Aug 0 1,372,703 9,838
Sep 0 1,372,703 9,838
Oct 0 1,372,703 9,838
Nov 0 1,372,703 9,838
Dec 0 1,372,703 9,838
Jan 0 1,372,703 9,838
Feb 0 1,372,703 9,838
Mar 0 1,372,703 9,838
Year End Balance 1,490,755 118,052

 

Year 16
Month Deposit Balance Interest
Apr 0 1,490,755 10,684
May 0 1,490,755 10,684
Jun 0 1,490,755 10,684
Jul 0 1,490,755 10,684
Aug 0 1,490,755 10,684
Sep 0 1,490,755 10,684
Oct 0 1,490,755 10,684
Nov 0 1,490,755 10,684
Dec 0 1,490,755 10,684
Jan 0 1,490,755 10,684
Feb 0 1,490,755 10,684
Mar 0 1,490,755 10,684
Year End Balance 1,618,960 128,205

 

Year 17
Month Deposit Balance Interest
Apr 0 1,618,960 11,603
May 0 1,618,960 11,603
Jun 0 1,618,960 11,603
Jul 0 1,618,960 11,603
Aug 0 1,618,960 11,603
Sep 0 1,618,960 11,603
Oct 0 1,618,960 11,603
Nov 0 1,618,960 11,603
Dec 0 1,618,960 11,603
Jan 0 1,618,960 11,603
Feb 0 1,618,960 11,603
Mar 0 1,618,960 11,603
Year End Balance 1,758,190 139,231

 

Year 18
Month Deposit Balance Interest
Apr 0 1,758,190 12,600
May 0 1,758,190 12,600
Jun 0 1,758,190 12,600
Jul 0 1,758,190 12,600
Aug 0 1,758,190 12,600
Sep 0 1,758,190 12,600
Oct 0 1,758,190 12,600
Nov 0 1,758,190 12,600
Dec 0 1,758,190 12,600
Jan 0 1,758,190 12,600
Feb 0 1,758,190 12,600
Mar 0 1,758,190 12,600
Year End Balance 1,909,395 151,204

 

Year 19
Month Deposit Balance Interest
Apr 0 1,909,395 13,684
May 0 1,909,395 13,684
Jun 0 1,909,395 13,684
Jul 0 1,909,395 13,684
Aug 0 1,909,395 13,684
Sep 0 1,909,395 13,684
Oct 0 1,909,395 13,684
Nov 0 1,909,395 13,684
Dec 0 1,909,395 13,684
Jan 0 1,909,395 13,684
Feb 0 1,909,395 13,684
Mar 0 1,909,395 13,684
Year End Balance 2,073,603 164,208

 

Year 20
Month Deposit Balance Interest
Apr 0 2,073,603 14,861
May 0 2,073,603 14,861
Jun 0 2,073,603 14,861
Jul 0 2,073,603 14,861
Aug 0 2,073,603 14,861
Sep 0 2,073,603 14,861
Oct 0 2,073,603 14,861
Nov 0 2,073,603 14,861
Dec 0 2,073,603 14,861
Jan 0 2,073,603 14,861
Feb 0 2,073,603 14,861
Mar 0 2,073,603 14,861
Year End Balance 2,251,933 178,330

 

Year 21
Month Deposit Balance Interest
Apr 0 2,251,933 16,139
May 0 2,251,933 16,139
Jun 0 2,251,933 16,139
Jul 0 2,251,933 16,139
Aug 0 2,251,933 16,139
Sep 0 2,251,933 16,139
Oct 0 2,251,933 16,139
Nov 0 2,251,933 16,139
Dec 0 2,251,933 16,139
Jan 0 2,251,933 16,139
Feb 0 2,251,933 16,139
Mar 0 2,251,933 16,139
Year End Balance 2,445,599 193,666

In the above example, you will notice that the interest calculations are made monthly and the total interest earnings are added to the main account balance only once a year at the beginning of the financial year. This means that compounded growth takes place only once every year and for the rest of the year, the account keeps earning at simple interest rate.

The total investment made in the above example is: 14 x 50000 = 7,00,000 but on maturity, the account balance grows to INR 2,445,599. This is nearly 3.5 times the total invested amount. However, do remember that since interest rate will keep changing every quarter, the final balance upon maturity will differ for the exact same investment amount.

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