ELSS vs Sukanya Samriddhi Yojana (SSY): Choose the Best for Your Daughter’s Future

(ELSS, SSY, lock-in period for SSY, partial withdrawal for SSY)


Close your eyes and imagine a world where your daughter’s dreams know no bounds. In this world, their ambitions to become a doctor, an engineer, or an artist are not shackled by the weight of financial constraints. As parents, our deepest desire is to give our children every opportunity to thrive and succeed in life. We long to witness them soar to new heights, free from the burdens of financial limitations.

But the reality often hits hard. The cost of education continues to rise, and the responsibility of securing our daughter’s future can feel overwhelming. During these moments, we realise the critical importance of making sound investment decisions – choices that will open doors and pave the way for our children’s dreams to become a reality.

In this blog post, we will explore two popular investment options in India: Equity Linked Saving Scheme (ELSS) and Sukanya Samriddhi Yojana (SSY). By understanding the features and benefits of each, you can make an informed decision about which option suits your daughter’s financial goals and aspirations.

ELSS – Equity Linked Saving Scheme:

Equity Linked Savings Scheme (ELSS) is a tax-saving investment option with a 3-year lock-in period. It allocates funds to market-linked investments, aiming for higher returns than fixed income securities. While the potential for growth is enticing, it comes with higher risk due to market exposure. ELSS offers investment flexibility with no limit on the investment amount, allowing individuals to customize their portfolios. However, it’s crucial to thoroughly assess the associated risks and make informed decisions before investing in ELSS.

ELSS is a mutual fund scheme that primarily invests in equities. It provides tax benefits under Section 80C of the Income Tax Act, making it an attractive option for tax planning while aiming for capital appreciation. Let’s delve into the key considerations when evaluating ELSS as an investment for your child:

  1. Potential for Higher Returns: ELSS investments have the potential to offer higher returns compared to traditional fixed income instruments. By investing in equities, ELSS allows your money to grow along with the growth of the stock market. However, it’s important to remember that higher returns come with a higher degree of risk due to market fluctuations. Historically, ELSS funds have returned 15% annually, on average.
  2. Tax Benefits: ELSS offers tax benefits on investments up to Rs. 1.5 lakh under Section 80C, making it an effective tool for tax optimization. Additionally, long-term capital gains (LTCG) up to Rs. 1 lakh are tax-free, adding another advantage to ELSS investments.
  3. Lock-in Period and Liquidity: ELSS comes with a mandatory lock-in period of three years, which is relatively shorter compared to other tax-saving investment options. This allows you to access your funds relatively sooner in case of any financial emergencies. However, it is advisable to stay invested for the long term to maximize the potential returns.

Sukanya Samriddhi Yojana (SSY):

SSY is a government-backed savings scheme specifically designed for the daughter in India. It focuses on the financial empowerment of girls and aims to provide a secure future. 

Sukanya Samriddhi Yojana (SSY) is specifically designed for female children up to the age of 10. The account is opened in the parent/guardian’s name with a maximum investment limit of 1.5 Lakhs. 

SSY offers a fixed interest rate, currently set at 7.60% compounded annually, which is reviewed quarterly. The scheme has a lock-in period of 15 years, but it matures when the child reaches 21 years of age. Notably, investors can also avail tax benefits under Section 80C. Compared to other fixed income securities, SSY provides a superior return on investment.

Let’s explore the key aspects of SSY when considering it as an investment for your child:

  1. Guaranteed Returns: SSY offers attractive fixed interest rates, which are declared by the government on a quarterly basis. These rates are generally higher than those offered by traditional savings instruments, ensuring a guaranteed return on investment.
  2. Tax Benefits: Similar to ELSS, Sukanya Samriddhi Yojana (SSY) provides tax benefits under Section 80C. Contributions made to SSY are eligible for deductions up to Rs. 1.5 lakh, and the interest earned, as well as the maturity amount, are tax-free.
  3. Purpose-Oriented Investment: Sukanya Samriddhi Yojana (SSY) is specifically designed to create a corpus for the daughter’s higher education or marriage expenses. By investing in SSY, you ensure that your daughter’s future needs are met with a dedicated fund, promoting financial security and empowerment.

Comparison and Considerations:

Now that we have examined the key features of both ELSS and SSY, let’s compare them to help you make an informed decision:

  1. Risk vs. Guaranteed Returns: ELSS, being equity-oriented, carries market risks but offers potentially higher returns. SSY, on the other hand, provides guaranteed returns with lower risk.
  2. Flexibility and Liquidity: ELSS has a shorter lock-in period of three years, offering more flexibility and liquidity. SSY has a longer lock-in period until the daughter turns 18, ensuring long-term savings for specific purposes.
  3. Tax Benefits: Both ELSS and SSY provide tax benefits under Section 80C, contributing to your overall tax planning strategy.
  4. Individual Goals and Needs: Consider your daughter’s future goals, aspirations, and financial requirements. ELSS provides a broader investment scope, while SSY focuses on specific purposes such as higher education or marriage.

Investment typeEquity mutual fundGovernment-backed savings scheme
Lock-in period3 years21 years
Minimum Investment500250
Maximum investmentNo limit1.5 lakh per year
Tax benefitsUp to 1.5 Lakhs under 80CUp to 1.5 Lakhs under 80C
Potential returnsHigherLower
Guaranteed returnsNoYes

Which is Better?

So, which is the better investment for your child? The answer depends on your individual circumstances and risk appetite. If you are looking for an investment with the potential for higher returns, then ELSS may be a good option for you. However, if you are looking for an investment with lower risk and guaranteed returns, then Sukanya Samriddhi Yojana (SSY) may be a better choice.  Both schemes offer tax benefits under Section 80C. If you have a higher risk appetite, investing in ELSS is recommended for its potential for higher returns and greater flexibility in terms of lock-in period and investment amount.


Choosing the best investment option for your daughter requires careful consideration of their financial goals and risk tolerance. ELSS offers the potential for higher returns but comes with market risks, while Sukanya Samriddhi Yojana (SSY) provides guaranteed returns and focuses on the specific needs of the girl child.

A prudent approach could involve diversifying your investments and allocating funds to both ELSS and Sukanya Samriddhi Yojana (SSY) to balance growth potential and stability. Additionally, consulting with a financial advisor can provide personalized guidance based on your unique circumstances and help you make a well-informed decision.

Remember, investing early and consistently is key to maximizing the growth of your daughter’s financial future. Evaluate your options, assess your risk appetite, and make a decision that aligns with your daughter’s aspirations, ensuring a solid foundation for their financial well-being.

Thank you for taking the time to read this blog post. I hope you found it informative and enjoyable. I would love to hear your thoughts on the topic and any suggestions you may have for future posts. Please feel free to leave a comment below.
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What is the minimum and maximum amount you can invest in SSY?

You can invest a minimum of Rs. 250 and a maximum of Rs. 1.50 lakh per year.

Can you do SIP in ELSS?

Yes, you can do SIP in ELSS just like other mutual funds.

What is the lock-in period for Sukanya Samriddhi Yojana (SSY)?

The lock-in period for Sukanya Samriddhi Yojana (SSY) is 21 years.

Is partial withdrawal allowed in Sukanya Samriddhi Yojana (SSY)?

For Sukanya Samriddhi Yojana, partial withdrawal (50% of the balance at the time of withdrawal) is allowed after the child turns 18 years and completes the 10th standard for the purpose of higher education or marriage. 

Also read:

  1. The basics of index fund investing: What you need to know
  2. Understanding Mutual Fund Portfolio Overlap and Strategies to Minimize It
  3. Unveiling the Millionaire-Making Secret: See How Investing in Mutual Funds Can Make You a Fortune!
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