Kolkata: As the name NPS Vatsalya indicates, it is a product that has been designed to open in the name of a child from the very first year. If one does it, and starts investing even a small amount every year, it can lead to a huge pool of money that the child can tap in his/her later years. This scheme has been flagged off by Union finance minister Nirmala Sitharaman in September 2024 with the express statement that the government wants to inculcate a habit of long-term investment among parents.
Just like NPS Vatsalya, PPF too has been designed in such a way that the parents or legal guardians of a kid can open a PPF account for a child right in its infancy. In fact, there is no minimum age of opening a PPF account. In both cases of NPS Vatsalya and PPF for minors, the child has to take control of the account when he/she attains adulthood (at the age of 18). Let’s have a look at both insturments.
What is the NPS Vatsalya scheme
According to NPS (National Pension System) rules, parents can open an account the child. The following documents will be needed for opening an account: Proof of identity and address for the guardian like Aadhaar card, passport, driving license, voter ID card, NREGA job card etc; proof of date of birth for the kid (such as birth certificate), guardian’s signature and guardian’s PAN.
The sooner one can open an NPS Vatsalya account, the better for the kid, since the more the eventual corpus can be. For example, if you can invest only Rs 1,000 a month in NPS Vatsalya in the name of a kid born on January 1, 2025, NPS Vatsalya calculator shows that by the time he/she turns 60, the account will have as much as Rs 4,00,59,576, or over Rs 4 crore.
Is PPF good for minors
A parent can open a PPF account for a minor at any post office or branch of designated banks. The following documents are needed: KYC documents of both minor and guardian besides proof of age of the minor must also be submitted. Passport size picture of the guardian and a cheque for a minimum of Rs 500.
The PPF calculator shows that if you start investing Rs 1.5 lakh (the maximum possible amount every year) in the PPF account and if it is continued for 50 years, the amount that will accumulate in it is Rs 6,75,75,988 (6.75 crore), out of which Rs 6,00,75,988 will be interest and Rs 75,00,000 the principal. And there is completely safety of capital. The PPF interest rate for minors is 7.1% — the same for PPF adult accounts.
Comments are closed.