NPS Vatsalya Yojana: Investing Rs 1000 every month in your child's name can create a large fund of Rs 11.57 crore in the long term, which will make their future financially secure.

NPS Vatsalya Yojana: If you want your child to be free from financial worries when they grow up, starting their financial journey today is the wisest step. A small start of just Rs 1000 per month can make a big difference in the long run. Through the NPS Vatsalya Yojana, an account can be opened in the name of children from newborns to 18 years of age.

Parents or legal guardians can operate this account. The investment made in this scheme gradually transforms into a large corpus with the help of compounding. This makes the child's future financially secure and strong. You can accumulate Rs 11.57 crore by investing Rs 1000 in this scheme.

How will Rs 11.57 crore be accumulated?

You start investing by depositing Rs 1000 every month in the NPS Vatsalya Yojana. If this investment is started from the child's birth and continues for 60 years, the total deposited amount will be only Rs 7.20 lakh. But compounding will provide significant benefits.

With an average annual return of 14 per cent on long-term investments, the money grows not only on the deposited amount but also on the interest earned. The growth seems slow in the initial years, but it accelerates after 20-25 years. Therefore, after 60 years, the total fund can reach approximately Rs 11.57 crore.

How does compounding work?

Compounding means that the interest earned on your invested money also starts growing in the following years. As time passes, the amount of interest also increases. The growth seems slow in the initial years, but in the long term, this money starts growing rapidly. For example, a total deposit of ₹7.20 lakh, contributed solely by you, grew to ₹11.57 crore due to the power of time and returns. This is why starting to invest at the time of a child's birth is the best strategy, as more time translates into greater financial growth.

Features of the plan:

The NPS Vatsalya plan also offers the facility of partial withdrawals when needed. After three years of opening the account, up to 25 percent of the accumulated amount can be withdrawn for education, medical expenses, or emergencies. This facility is available twice before the age of 18 and twice between the ages of 18 and 21.

After the age of 18, the child can manage the account themselves or shift to a regular NPS account. Upon exiting the plan at age 21, at least 80 percent of the amount must be used for an annuity (pension). The remaining 20 percent can be received as a lump sum. This plan creates a strong long-term financial foundation for the child and opens the door to fulfilling big dreams with small investments.