1. Please add a comparison with MF investment. This would help people who have never invested in MF to understand how it helps to invest in MF when compared to savings schemes for long term.

  2. I have 2 daughters aged 2 and 3 years. Do you think it makes sense for me to open Saukanya accounts for them and maximize my investments in them to 1-1.5 lacs each? I want to save for their wedding. I have earlier invested in stock markets and lost a decent amount of money and hence do not want to take the stock market or mutual fund route. Please advise

    1. Hi Shubhi , I did not see any replies to the questions asked for this post from the author of the post , lets wait for replies.

  3. Since you have already mentioned that you don't want to take the equity or MF route, then you can chose Sukanya accounts for investment. Please remember that the money you put in SSA is tax deductible only upto Rs 1.5 Lacs under Section 80C. So even if you put Rs 3 lacs in SSA, you will only get a deduction of max Rs 1.5 Lacs.

    Also, you need to understand that you cant withdraw from SSA until your daughters reach 18 or get married. So this account is not as liquid as PPF – which can be withdrawn fully after 15 years.

  4. Nice article, Dev. Even though, I will prefer a diversified MF for general long term investment, I can see the attractiveness of this scheme given the guaranteed returns. For a specific, and crucial financial milestone like daughter's marriage, it makes lot of sense to invest in low risk investment vehicles. Assuming a 20 year investment time frame, you would anyways start shifting money to debt/fixed income instruments as you reach closer to maturity date (say 3-5 years ago). And what if you encounter a bear market during first few/middle years. That would require you to keep invested in equities for a longer time. So, IMHO, for a specific purpose of daughter's marriage, this scheme makes lot of sense.

  5. People needs to understand difference between investments and savings . If one has 20 years to build corpus then it always makes sense to invest in well diversified MF like HDFC Equity….

  6. That's right Sumit. If one was to choose a low risk investment product, SSA seems to be a very decent option. But there is one thing which I don't like in particular – one cannot invest after the 14th year of account's existence, even though maturity is still 7 years away.

    To avoid this problem, probably one can do the following:

    Year 0 to Year 14 – Invest in both SSA & PPF (a small amount in PPF to keep it active for 14 years)
    Year 14 onwards (upto 21st year or more) – Invest solely in PPF

  7. Agreed KP. Even I would prefer MFs for anything more than 10+ years. But since a lot of people have very low risk appetite, this just might be their kind of product.

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