So the Sukanya Samriddhi Account is now EEE. Investments, interest and maturity are tax-free like PFF. Here is why it means nothing and why I will never invest in it if I have a daughter (I don’t).
1) You can withdraw only 50% at the age of 18. My imaginary daughters education is more important to me that her marriage. So I would appreciate higher liquidity. I also find this feature bizarre.
2) Many, if not most, children graduate from school at age 17. The money will still be locked in this fancy sounding instrument. Fantastic!
3) Account will mature at age 21 or when she gets married. Fantastic again. Not much use to me.
I would rather open a PPF account the day she is born and invest about 40% here and rest in equity mutual funds. After 15 financial years, the full PPF corpus is liquid.
The idea is to have full liquidity on the entire corpus when she is about to enter college.
Liquidity is more important that returns. Adequate exposure to equity mutual funds will offset the 1% difference in return between Sukanya Samriddhi Account and PPF.
Verdict: Do not lock your in money in this fancy sounding scheme. It is not meant for those who read personal finance blogs.
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