NPS Vatsalya Yojana: If you want your kid to have a stress-free financial future, kicking off their financial journey now is the smartest move. Just starting with Rs 1,000 a month can really add up over time. With the NPS Vatsalya Yojana, you can open accounts for kids from newborns up to 18 years old.
Parents or legal guardians can manage these accounts. The money you invest in this plan grows into a substantial amount thanks to compounding. This way, your child can have a financially secure and robust future. By putting in Rs 1,000 into the plan, you could accumulate Rs 11.57 crore.
How does the Rs 11.57 crore get built up?
You begin your investment in the NPS Vatsalya scheme by putting in Rs 1,000 each month. If you start when your child is born and keep it up for 60 years, your total contributions will only be Rs 7.20 lakh. But compounding will really boost your returns.
With long-term investments that average a 14% annual return, your money grows not just on what you put in but also on the interest it earns. The growth might be slow at first, but it picks up speed after 20–25 years. So, after 60 years, you could see your total amount reach around Rs 11.57 crore.
How does compounding work?
Compounding means that the interest you earn on your money keeps increasing each year. As time goes on, the interest amount grows too. It might feel like growth is slow in the beginning, but over the long haul, your money can really take off. For instance, your total contributions of Rs 7.20 lakh can turn into Rs 11.57 crore thanks to time and returns. That’s why starting to invest when your child is born is such a smart strategy. The more time you give it, the bigger the financial growth.
These facilities are included in the plan
The NPS Vatsalya scheme allows for partial withdrawals when necessary. After three years from the account opening, you can take out up to 25% of the deposit for education, medical costs, or emergencies. This option is available twice before the child turns 18 and twice again between the ages of 18 and 21.
Once the child reaches 18, they can take over the account or transition to a standard NPS. When they exit at 21, at least 80% of the total amount must be put into pension funds, while the remaining 20% can be taken as a lump sum. This plan creates a solid long-term financial base for the child and helps them achieve significant goals with small contributions.
