Kolkata: Invest a molehill, get a mountain. No, this is no glib slogan of any ponzi scheme. But this can easily be the slogan of the NPS Vatsalya scheme which was inaugurated in September 2024 by Union finance minister Nirmala Sitharaman for encouraging long-term investment with a view to paving the path to financial freedom marshalling the giant force of compounding.
In fact, if the parents of an infant can start an NPS Vatsalya account and if, after he/she grows up, continues to invest even a small amount every month, a huge amount, quote unbelievable at first glance, can be created. The calculations are easily evident if you use a free online calculator of the NPS Vatsalya. Let’s have a look at the calculations.
How much is 1,000 per month in NPS
Let’s assume that the parents of a kid who is born on January 1, 2025, opens an NPS Vatsalya account. This account can be opened by the parents or legal guardian for the kid with the KYC of the parents/guardians. Now let us assume that the parents invest just Rs 1,000 in that account every month. Though the kid will be at liberty to withdraw a certain sum from the account when he/she turns 18, let’s assume that it is not done and the individual continues to invest the paltry sum year after year. Assuming the investment continues till the age of 60 of the person, the amount in the NPS account will stand at nothing less than Rs 10,04,18,857, or Rs 10.04 crore. The total out of pocket investment will amount to only Rs 7.2 lakh.
Now look at the force of compounding which can turn a paltry annual investment of Rs 12,000 into this amount over a period of 60 years. The other assumption here is that the rate of return is 12%, which is a template rate in the calculator. Even if we settle for a 10$ return, the final amount in the corpus turns to Rs 4,00,59,576 or Rs 4 crore.
How much is 5,000 per month in NPS
Now, if a parent goes for a monthly investment of Rs 5,000, the amount that will be left in the corpus is a huge Rs 50,20,94,283, or Rs 50.20 crore. The out of pocket investment in these 60 years, or 720 months, will be Rs 36 lakh. This amount will accumulate if the rate of return is 12%. If the rate of return is considered at 10%, the final amount when the kid turns a senior citizen will be Rs 20,02,97,882 or Rs 20.02 crore.
If anyone told you that Rs 1,000 a month can turn into more than Rs 10 crore in six decades, you would probably laugh your head off. But then you should take a long hard look at NPS Vatsalya. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
