New Delhi. Everyone is worried about the future of their child. Parents also save for this and want to increase that money by investing. Although there are many investment plans in the market for children, but the recently launched NPS Vatsalya Scheme is considered to be the best among all of them. In this scheme, there is a benefit of Compound Interest, so that your minor amount can also make a fund of crores after a long time.
How to become a fund of 11 crore
Under the scheme, you will invest Rs 10,000 per year to make funds of Rs 11 crore, in which about 834 rupees will be deposited every month. This amount can be invested till the age of 18 years. Subsequently, the account turns into a normal NPS account and this amount increases till the age of 60 years.
If you deposit 10 thousand rupees every year in the name of a child, then a total of Rs 1.80 lakh will be invested in 18 years. If you get 10 percent return every year on this investment, then in 18 years this money will increase to about 5 lakh rupees. However, if we look at the figures of the last 20 years, NPS has got a return of about 12.80 percent. Now from 18 years to the age of the next 60 lakhs, your investment will continue to get interest and there will be no need to invest any further money.
How much money will be made by the age of 60 years
As we told that if you have opened an account in the name of a newborn baby and by the age of 18, you get 10 percent interest on your investment, then a fund of 5 lakhs will be ready. Now on this 5 lakh rupees, you will continue to get interest without any investment till the age of the next 60 years and if you get a return of 10 percent, then you can become a fund of Rs 2.75 crore by the age of 60 years. However, as it has been 20 years, according to that, if you get the return of 12.86%, then a fund of Rs 5 lakh can increase to Rs 11.05 crore.
To make a big fund, you have to choose an option of aggressive (75% equity). In this, you will have to invest 75 percent money in equity, so that it can get a thick fund according to the market. Looking at the previous 20 -year record of NPS, 50% equity, 30% corporate date and 20% of government securities have got an average return of 11.59% with investment in government securities. If investment in equity is reduced to 75%, then the return can be up to 12.86%.
How to open a child’s account
- Go to EnPS website
- Click on Register Now under NPS Vatsalya (Minors) tab.
- Enter the parents’ date of birth, PAN, mobile number and email.
- Start registration after OTP verification.
- Upload the details of the minor and the guardian, the required documents.
- Make a minimum of Rs 1,000 initial investment.
- Through double OTP or Esignintre, open your account.
When can you withdraw money from account
After a 3-year lock-in period, parents can withdraw up to 25% for education, serious illness, or more than 75% disability, which can be withdrawn thrice throughout the time. The account at the age of 18 years turns into a general NPS account. At this time at least 80% of the funds have to be used to buy annuity, the remaining 20% cash can be withdrawn. If the total fund is less than Rs 2.5 lakh, the entire amount can be withdrawn.
