National Pension System, or the NPS, witnessed the emergence of NPS Vatsalya, its latest avatar, that is designed to equip parents to pave the way for building a big corpus of money for their children. While the rules allow a person to withdraw the amount of money from his/her NPS account, that his/her parents might have opened, every person who has an NPS Vatsalya scheme can reach a huge pool of money if the account is continued till retirement ie, the age of 60.
In September 18 this year, Union finance minister Nirmala Sitharaman launched the extension of NPS and exhorted parents to go for very long term wealth building for their kids. An NPS Vatsalya calculator will reveal the huge amount that one can build even with small/moderate contributions to this account.
Is NPS Vatsalya good or bad
Let’s turn to the NPS Vatsalya calculator to know how spectacularly your small but regular contributions in the scheme can lead to a fantastic corpus for your child in his/her advanced years. The NPS Vatsalya calculator will require you to type a few basic figures. These are your kid’s date of birth, contribution type (monthly or annual), amount of contribution, desired return on investment etc. Once you type in these information, NPS Vatsalya calculator will calculate the following: total investment till the child turns 18, the total corpus when he/she is 18 and the total corpus at 60.
Small contribution, big gain in NPS Vatsalya
Check this amazing calculation. Assume a child is born on April 1, 2024. The parents create an NPS Vatsalya account with the birth certificate of the child and their own KYC documents. The calculation stands like the following:
Child’s date of birth: December 1, 2024
Contribution: Rs 3,000 (Monthly)
Return on investment: 10%
NPS Vatsalya calculator will reveal:
Total nominal investment (till child turns 18): Rs 6,48,000
Corpus when kid is 18: Rs 18,05,727
Withdrawal options (at the age of 18): Up to Rs 2.5 lakhs can be withdrawn as a lump sum, with the remainder in a pension plan
Corpus at 60: Rs 12,01,78,729 (or Rs 12.01 crore)In other words, keeping aside only Rs 100 a day can lead to a total corpus of Rs 12.01 crore when your kid turns 60. The most significant point to note is that it does not assume any increase in investment down the 60 years. If the contributions are raised, the amount will rise further.
NPS Vatsalya marshals the giant power of compounding perhaps better than any other investment instrument. It will leave you agape to know how much you can secure for your child with contribution of only Rs 100 a day. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
