Sukanya Samriddhi Yojana vs Children's Fund: Which one has fared better over the years -- expert share tips

Ensuring the financial well-being of your children is a crucial aspect of parenthood. Whether it's for their education, marriage, or other significant life events, it is important to provide them with financial assistance as they grow. To guarantee that they have the funds they need when the time comes, it is imperative to spread out your investments across various schemes. 

In a recent social media post, B Padmanaban, a Certified Financial Planner, highlighted that the children's mutual fund had outperformed the SSY by a factor of two. This fund provides unparalleled flexibility without any constraints and is not restricted to only female children. Despite its many advantages, a mere few are truly taking advantage of this opportunity.

"Sukanya Samriddhi Yojana (SSY) compared to Children's Fund in Mutual Funds and Real Investment took place 21 years ago. The aim of this message is to gain a broader perspective.  There is no suggestion for any scheme. We are focused on just one area and have overlooked the opportunity. The children's mutual fund was delivered twice as much as the SSY. It offers complete flexibility with no restrictions and is not limited to just the girl child. There are numerous advantages, yet only a handful are genuinely exploring this," Padmanaban wrote on X. 

He further wrote that investors should note that mutual fund investments carry market risk. It is crucial to carefully examine all scheme-related documentation before making any investment choices. The reports provided are for informational purposes only and should be utilised by the recipient.

Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana is a government-backed savings scheme designed to provide financial security for young girls. Legal guardians or parents have the option to establish an account for a girl child under the age of 10. The account will reach maturity either 21 years after its establishment or upon the girl's marriage after she turns 18. As of 2025, the scheme offers an annual interest rate of 8.2%, compounded annually. Deposits can vary from a minimum of Rs 250 to a maximum of Rs 1.5 lakh per financial year. Additionally, the scheme offers tax benefits under Section 80C of the Income Tax Act.

SSY allows partial withdrawals for educational purposes once the child reaches 18 years old, and the full amount can be withdrawn after they turn 21.

The account has a lock-in period of 21 years, meaning deposits will mature after this period. In the event that the SSY account holder (girl child) marries before the 21-year maturity period, the account will be closed and cease to be operational after her marriage.

Investment in Mutual Funds

Investing regularly in mutual funds through Systematic Investment Plans (SIPs) is a great way to instill financial discipline and take advantage of compounding over time. Equity mutual funds have the potential to deliver higher returns in the long run, making them suitable for goals like funding higher education. While SIPs do not offer tax deductions under Section 80C, certain mutual funds like Equity-Linked Savings Schemes (ELSS) do provide tax benefits. SIPs are considered one of the most effective investment strategies for growing wealth, but it's important to be aware of the associated risks and volatility.

Investing in mutual funds can be a wise strategy for securing your child's financial future, especially as education costs continue to rise significantly. With inflation rates averaging 9-11% and education expenses doubling every six to seven years, it is crucial to plan ahead to stay financially prepared. By starting early and diversifying your portfolio with a mix of equity and debt funds, you can ensure steady growth in your investments. For optimal results, consider a distribution of 80% equity and 20% debt funds to target a 12% return over the long term, ultimately building a substantial nest egg over a 15-20 year period.

Consider diversifying your investment portfolio across large cap, mid cap, and small cap funds, as well as exploring strategy-based mutual funds such as focused and contra categories to potentially generate Alpha. As your investment horizon shortens, gradually transitioning funds to safer debt or liquid funds can help preserve gains and provide stability. Another option to consider is combining investing with taking out an education loan, allowing the returns from your accumulated corpus to continue growing while generating returns on the total corpus.

Saving in Hybrid Funds

Hybrid funds combine equity and debt investments to achieve the scheme's investment objectives, offering the potential for higher returns with lower risks. These funds aim to assist investors in reaching both short-term and long-term financial goals, with the equity portion geared towards long-term wealth generation and the debt component providing stability amid market fluctuations.

The 7-3-1 rule can lead to successful equity investing. By investing with a minimum time frame of 7 years, you can reduce the likelihood of negative returns (which have not occurred in the last 25+ years) and increase the chance of achieving returns exceeding 10% compound annual growth rate (CAGR). Longer time frames provide sufficient time for recovery from significant market downturns.