Many parents wish that they could secure their loved ones through their entire life. At last, there is a financial product in the market that allows them to do precisely that. NPS Vatsalya scheme has been launched by Union Finance Minister Nirmala Sitharaman with the express intention of inculcating a habit of long-term investment among people with a focus on creating value for advanced years in one’s life.
The magic of compounding actually gets a big playground to manifest its full potential through NPS Vatsalya Yojana. Let’s see what fantastic amount even small contributions can achieve. The only condition – keep investing for a big corpus.
NPS Vatsalya calculator
Let’s dive into the calculations right away. The NPS Vatsalya calculator will ask you to type in a few basic figures that will provide you a guidance to the amounts that your kid can amass by the year 18 (ie, when he/she turns into an adult) and the corpus that will be ready when he/she touches 60 (ie, year of retirement from service).
Contribution of Rs 5000/month
Suppose a child was born on the first day of the current financial year – April 1, 2024. To make the job easier, choose the investment mode “monthly”. Settle for Rs 5,000 a month. Next consider increasing the investment by 5% every year, which means in the second year, you would invest Rs 5,250 every month and so on.
Now assume you would manage to get a 12% return on your investments every year, which is not an impossibility in the long term. The amount that such a schedule will lead one to amass in the account when the kid turns 18 is Rs 50,72,013 (Rs 50.72 lakh). The amount that the account would have at the age of 60 is – hold your breath – Rs 25,17,39,803 (Rs 25.17 crore).
PRAN: Permanent Retirement Account Number
PRAN – NPS Vatsalya has given birth to this term in the financial lexicon of India. Strange that it might appear, the NPS authorities will assign a PRAN, or Permanent Retirement Account Number, for a kid as soon as its parents open an NPS Vatsalya account.
Income tax benefits
Also remember that NPS Vatsalya can get you income tax deductions. Most important, this income tax deduction is available both in the new tax regime and old tax regime.
NPS Vatsalya scheme has paved the way for parents to lay the foundation for financial security of their kids right after their birth and the amount can be incredible indeed. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
