Kolkata: The force of compounding over several decades can generate eye-popping returns. NPS Vatsalya is a scheme which illustrates it spectacularly. It is an extension of the National Pension System (NPS) which allows an account to be opened for minor children. The significant point is that parents can open an NPS Vatsalya account for a baby who is just a few weeks or months old. It allows for financial freedom for their kids when they grow up. If they can continue even after they grow up, it will generate incredible amount of money even with a meagre regular investment.
NPS Vatsalya returns
Free online calculators are available which help one calculate the returns of NPS Vatsalya scheme. Let us assume the parents of a one-year old child invest Rs 50 every day in an NPS Vatsalya account. It works out to Rs 1,500 a month. Rs 50 is really a pittance, which buys about three or four standard cigarette sticks.
Now hold your breath. If the investments are continued, when the kid turns 18 — becomes an adult — the NPS account will have Rs 10,01,881 (Rs 10.01 lakh). Now, if the investment is continued till the person turns 60 at the same rate, the corpus will balloon to Rs 17,36,06,684 (or Rs 17.36 crore)! The point to note here is that Rs 50 will become absolutely meaningless a few decades from now, but it will help generate a big amount. If the investment amount is increased as the person grows, the returns will be commensurate.
NPS Vatsalya key facts
Launched: September 18, 2024
For: Minors (under 18 years)
Account Operator: Parents or legal guardians
Minimum investment: Rs 1,000 (to open an account)
Annual investment: Rs 1,000/year
Maximum contribution: No upper limit
Tax benefit: Maximum of Rs 1.5 lakh under section 80C of Income Tax Act
Regulated by: Pension Fund Regulatory Authority of India
(This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, INVITs, any form of alternative investment instruments and crypto assets.)
Comments are closed.