Sukanya Samriddhi Vs Child Mutual Fund
Development of children, especially female children is very important in India. Be it for their education, career, marriage, etc. girls and their parents need some amount of special benefits in this country as the state of girls in this country is not very good. For the upliftment and betterment of the girl child, the government has come up with many schemes and plans, which can be used by the girls and also their parents for the girl child’s needs.
The Child Mutual Fund
There are many schemes available in the market that is called the Child Mutual Fund. These schemes are designed in a way that it helps in the betterment of the child’s future. These mutual funds have a certain amount of risk associated with them but then they also have a high rate of interest. The interest rates and the other factors are related to the market condition directly. Such schemes are available for both male and female children and most of these schemes offer good benefits on its maturity.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is an investment scheme that is launched by Narendra Modi, the Prime Minister of India. The main aim of launching this scheme is to secure and improve the future of any girl child in India. This scheme is a part of the ‘Beti Bachao Beti Padhao’ campaign, which was started by the Prime Minister. Parents of a girl child can also benefit from this plan, as the fund can help in the education and the marriage of the girl. Even on small deposits, the plan offers good amount of interest.
The basic factors about the scheme are given below in the table:
|1||Who would be the depositor of the account?||The girl child’s parents or guardian can be the depositor of the Sukanya account.|
|2||Where to open the account?||There are many banks, which the government has authorized for the purpose of opening such accounts. The Sukanya account can be opened in these banks or in post office as well.|
|3||Who is the operator of the account?||Until the girls age turns 10, her parents or guardian may operate the account. Once she is 10 years of age, she may operate the account herself.|
|4||What is the age limit?||The account can be opened after the birth of the girl child, until he attains the age of 10. It is to be opened by a parent or a guardian.|
|5||Can the account be operated after maturity?||Yes, if the girl wants then she can continue the account. The tenure of the Sukanya account is up to 21 years of the girl.|
Difference between Sukanya scheme and Child mutual fund
So of the main features and differences between the two kinds of child scheme is given below:
- First and foremost difference is that most of the child mutual funds are available for both male and female children whereas the Sukanya Samriddhi Yojana is focused on female children only.
- Mutual Funds allow the account to be opened for a girl as well as a boy child. But a Sukanya Samriddhi Account (SSA) can be opened only in the name of a girl child.
- SSA allows only one account to be opened in the name of a girl child. But in the name of one child many Mutual Fund accounts can be opened.
- In most of the mutual fund scheme, an account can be opened only after the child attains 3 months. But a SSA can be opened immediately after the girl child is born.
- Likewise, a mutual fund for a child can be opened until the child reached 18 years, but a SSA can be opened only till the girl becomes 10 years.
- The best part about the SSA is that there is a fixed interest rate provided to this account (currently 9.2%). But the interest rate of the child mutual fund varies with the bank you choose and also with the market conditions. Therefore the Child mutual fund has a certain amount of risk in it.
- Mutual funds have an option of providing a nomination, but in a SSA there is no option of providing a nominee.
- For a SSA there is no amount of tax charged on the interest you earn, but then the tax rate for Child mutual fund depends on the plan that you choose.
- The amount accumulated can be partially withdrawn once the girl reaches the age of 18, under the SSA. But in the case of a Child mutual fund, the money can be withdrawn after 3 or 4 years. Also the under the Sukanya Yojana, the account matures after the girl attains the age of 21, after which she can withdraw the amount. But in case of Mutual Funds, it can be withdrawn by the child or the parent anytime.
- The risk factor is high in case of mutual funds because of its direct link with the market shares. But it is not so with SSA, which makes it more preferable.
- Many Child Mutual funds offer other insurance benefits but SSA offers no such benefits.
- The maximum deposit allowed in the SSA is Rs1, 50,000 whereas a Child Mutual Fund has no such deposit limitation.
- There are around 28 banks which have been authorized for creating SSA. Also SSA can be created in a post office. But Child mutual fund options are available in banks such as Kotak, ICICI, State Bank, HDFC, etc.