Sukanya Samriddhi Yojana or equity mutual funds: Better option for my daughter?1 min read . Updated: 05 Nov 2020, 09:34 AM IST
- My daughter is 6 years old
- I want to create around ₹50-60 lakh for her when she turns 20
I want to invest for my daughter’s future. I am confused between Sukanya Samriddhi Yojana and equity mutual funds. Which is a better option to create around ₹50-60 lakh for her when she turns 20. My daughter is 6 years old currently. It is a non- negotiable goal for me. I don't want to take any chances. Kindly advise. How much should I invest to reach my target money?
By Raghvendra Nath, MD, Ladderup Wealth Management
Both the products serve different purpose. Mutual funds are tools for capital appreciation while, Sukanya Samriddhi Yojana (SSY) is a fixed income product.
While mutual funds are liquid instruments. Investments made in Sukanya Samriddhi Yojana fund would be locked in till your daughter reaches the age of 21 years.
Thus in case you want the money exactly when your daughter reaches 20 years then in that case it won’t be possible. It is advisable to create a diversified portfolio of the above two investment avenues. In order to create a corpus of ₹50-60 lakh in next 14 years you would require a SIP of ₹12,000 per month. And you can allocate ₹3,000 per month in the Sukhanya Samriddhi Fund and allocate the rest ₹9,000 in Mirae Asset Large Cap Fund, DSP Mid Cap Fund and Kotak Emerging Equity Fund in equal proportions.
Since the time horizon is long it is advisable to have a larger allocation towards equity as over the long term the volatility in equity reduces by a large extent.
(Views as expressed by the expert.)