Should you buy Sukanya Samriddhi Yojana?

The launch of Sukanya Samriddhi Yojana (SSY) by the government for the girl child has sparked considerable interest given its tax benefit and interest rate higher than Public Provident Fund. The SSY offers 75 basis points (bps) higher than the 10-year government bond as against 25 bps by the PPF. For 2014-15, the interest rate for PPF is 8.7% while the SSY offers 9.1%.

But, wealth planners believe subscribers should put money in this product along with an investment in equity products. This is because interest rates could fall in the future. Given that the investors are investing for a period of 10 years or more, a combination of equity mutual funds and SSY will generate better returns.

"Depending on their risk profile, investors could use SSY along with a combination of equity mutual funds/child funds to meet long-term asset allocation goals for their girl child," says Vishal Dhawan, chief financial planner at Plan Ahead Wealth Advisors.