Sukanya Yojana Random Deposit

Sukanya Yojana 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
MonthDepositBalanceInterest
Apr10,00010,00072
May10,00072
Jun10,00072
Jul10,00072
Aug20,00030,000215
Sep30,000215
Oct5,00035,000251
Nov35,000251
Dec10,00045,000323
Jan45,000323
Feb5,00050,000358
Mar50,000358
Year End Balance52,5802,580

 

Year 2
MonthDepositBalanceInterest
Apr10,00062,580448
May62,580448
Jun62,580448
Jul62,580448
Aug20,00082,580592
Sep82,580592
Oct5,00087,580628
Nov87,580628
Dec10,00097,580699
Jan97,580699
Feb5,000102,580735
Mar102,580735
Year End Balance109,6827,102

 

Year 3
MonthDepositBalanceInterest
Apr10,000119,682858
May119,682858
Jun119,682858
Jul119,682858
Aug20,000139,6821,001
Sep139,6821,001
Oct5,000144,6821,037
Nov144,6821,037
Dec10,000154,6821,109
Jan154,6821,109
Feb5,000159,6821,144
Mar159,6821,144
Year End Balance171,69512,013

 

Year 4
MonthDepositBalanceInterest
Apr10,000181,6951,302
May181,6951,302
Jun181,6951,302
Jul181,6951,302
Aug20,000201,6951,445
Sep201,6951,445
Oct5,000206,6951,481
Nov206,6951,481
Dec10,000216,6951,553
Jan216,6951,553
Feb5,000221,6951,589
Mar221,6951,589
Year End Balance239,04017,346

 

Year 5
MonthDepositBalanceInterest
Apr10,000249,0401,785
May249,0401,785
Jun249,0401,785
Jul249,0401,785
Aug20,000269,0401,928
Sep269,0401,928
Oct5,000274,0401,964
Nov274,0401,964
Dec10,000284,0402,036
Jan284,0402,036
Feb5,000289,0402,071
Mar289,0402,071
Year End Balance312,17823,137

 

Year 6
MonthDepositBalanceInterest
Apr10,000322,1782,309
May322,1782,309
Jun322,1782,309
Jul322,1782,309
Aug20,000342,1782,452
Sep342,1782,452
Oct5,000347,1782,488
Nov347,1782,488
Dec10,000357,1782,560
Jan357,1782,560
Feb5,000362,1782,596
Mar362,1782,596
Year End Balance391,60529,427

 

Year 7
MonthDepositBalanceInterest
Apr10,000401,6052,878
May401,6052,878
Jun401,6052,878
Jul401,6052,878
Aug20,000421,6053,022
Sep421,6053,022
Oct5,000426,6053,057
Nov426,6053,057
Dec10,000436,6053,129
Jan436,6053,129
Feb5,000441,6053,165
Mar441,6053,165
Year End Balance477,86336,258

 

Year 8
MonthDepositBalanceInterest
Apr10,000487,8633,496
May487,8633,496
Jun487,8633,496
Jul487,8633,496
Aug20,000507,8633,640
Sep507,8633,640
Oct5,000512,8633,676
Nov512,8633,676
Dec10,000522,8633,747
Jan522,8633,747
Feb5,000527,8633,783
Mar527,8633,783
Year End Balance571,53943,676

 

Year 9
MonthDepositBalanceInterest
Apr10,000581,5394,168
May581,5394,168
Jun581,5394,168
Jul581,5394,168
Aug20,000601,5394,311
Sep601,5394,311
Oct5,000606,5394,347
Nov606,5394,347
Dec10,000616,5394,419
Jan616,5394,419
Feb5,000621,5394,454
Mar621,5394,454
Year End Balance673,27251,732

 

Year 10
MonthDepositBalanceInterest
Apr10,000683,2724,897
May683,2724,897
Jun683,2724,897
Jul683,2724,897
Aug20,000703,2725,040
Sep703,2725,040
Oct5,000708,2725,076
Nov708,2725,076
Dec10,000718,2725,148
Jan718,2725,148
Feb5,000723,2725,183
Mar723,2725,183
Year End Balance783,75360,481

 

Year 11
MonthDepositBalanceInterest
Apr10,000793,7535,689
May793,7535,689
Jun793,7535,689
Jul793,7535,689
Aug20,000813,7535,832
Sep813,7535,832
Oct5,000818,7535,868
Nov818,7535,868
Dec10,000828,7535,939
Jan828,7535,939
Feb5,000833,7535,975
Mar833,7535,975
Year End Balance903,73669,983

 

Year 12
MonthDepositBalanceInterest
Apr10,000913,7366,548
May913,7366,548
Jun913,7366,548
Jul913,7366,548
Aug20,000933,7366,692
Sep933,7366,692
Oct5,000938,7366,728
Nov938,7366,728
Dec10,000948,7366,799
Jan948,7366,799
Feb5,000953,7366,835
Mar953,7366,835
Year End Balance1,034,03780,301

 

Year 13
MonthDepositBalanceInterest
Apr10,0001,044,0377,482
May1,044,0377,482
Jun1,044,0377,482
Jul1,044,0377,482
Aug20,0001,064,0377,626
Sep1,064,0377,626
Oct5,0001,069,0377,661
Nov1,069,0377,661
Dec10,0001,079,0377,733
Jan1,079,0377,733
Feb5,0001,084,0377,769
Mar1,084,0377,769
Year End Balance1,175,54491,507

 

Year 14
MonthDepositBalanceInterest
Apr10,0001,185,5448,496
May1,185,5448,496
Jun1,185,5448,496
Jul1,185,5448,496
Aug20,0001,205,5448,640
Sep1,205,5448,640
Oct5,0001,210,5448,676
Nov1,210,5448,676
Dec10,0001,220,5448,747
Jan1,220,5448,747
Feb5,0001,225,5448,783
Mar1,225,5448,783
Year End Balance1,329,221103,677

 

Year 15
MonthDepositBalanceInterest
Apr01,329,2219,526
May01,329,2219,526
Jun01,329,2219,526
Jul01,329,2219,526
Aug01,329,2219,526
Sep01,329,2219,526
Oct01,329,2219,526
Nov01,329,2219,526
Dec01,329,2219,526
Jan01,329,2219,526
Feb01,329,2219,526
Mar01,329,2219,526
Year End Balance1,443,534114,313

 

Year 16
MonthDepositBalanceInterest
Apr01,443,53410,345
May01,443,53410,345
Jun01,443,53410,345
Jul01,443,53410,345
Aug01,443,53410,345
Sep01,443,53410,345
Oct01,443,53410,345
Nov01,443,53410,345
Dec01,443,53410,345
Jan01,443,53410,345
Feb01,443,53410,345
Mar01,443,53410,345
Year End Balance1,567,678124,144

 

Year 17
MonthDepositBalanceInterest
Apr01,567,67811,235
May01,567,67811,235
Jun01,567,67811,235
Jul01,567,67811,235
Aug01,567,67811,235
Sep01,567,67811,235
Oct01,567,67811,235
Nov01,567,67811,235
Dec01,567,67811,235
Jan01,567,67811,235
Feb01,567,67811,235
Mar01,567,67811,235
Year End Balance1,702,498134,820

 

Year 18
MonthDepositBalanceInterest
Apr01,702,49812,201
May01,702,49812,201
Jun01,702,49812,201
Jul01,702,49812,201
Aug01,702,49812,201
Sep01,702,49812,201
Oct01,702,49812,201
Nov01,702,49812,201
Dec01,702,49812,201
Jan01,702,49812,201
Feb01,702,49812,201
Mar01,702,49812,201
Year End Balance1,848,913146,415

 

Year 19
MonthDepositBalanceInterest
Apr01,848,91313,251
May01,848,91313,251
Jun01,848,91313,251
Jul01,848,91313,251
Aug01,848,91313,251
Sep01,848,91313,251
Oct01,848,91313,251
Nov01,848,91313,251
Dec01,848,91313,251
Jan01,848,91313,251
Feb01,848,91313,251
Mar01,848,91313,251
Year End Balance2,007,920159,007

 

Year 20
MonthDepositBalanceInterest
Apr02,007,92014,390
May02,007,92014,390
Jun02,007,92014,390
Jul02,007,92014,390
Aug02,007,92014,390
Sep02,007,92014,390
Oct02,007,92014,390
Nov02,007,92014,390
Dec02,007,92014,390
Jan02,007,92014,390
Feb02,007,92014,390
Mar02,007,92014,390
Year End Balance2,180,601172,681

 

Year 21
MonthDepositBalanceInterest
Apr02,180,60115,628
May02,180,60115,628
Jun02,180,60115,628
Jul02,180,60115,628
Aug02,180,60115,628
Sep02,180,60115,628
Oct02,180,60115,628
Nov02,180,60115,628
Dec02,180,60115,628
Jan02,180,60115,628
Feb02,180,60115,628
Mar02,180,60115,628
Year End Balance2,368,132187,532

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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