Recently, the central government has launched a scheme under which you can save money for your children. The scheme is NPS Vatsalya, under which a National Pension System (NPS) account can be opened for children below the age of 18 years. By investing in this scheme, a large sum of money will be deposited in the name of the child when he or she grows up. In this case, it is a plan that concerns the future of the child.
Under NPS Vatsalya Yojana, any Indian parent can start investing at least Rs 1000 in the name of their child. There is no limit on the maximum amount. When the child turns 18, you can withdraw the money deposited in it. However, if you want, you can also keep it for 60 years from which you can get a huge amount of money.
When can I withdraw the amount from NPS Vatsalya?
In this plan, the child’s account age should be at least 3 years old. After the child turns 18, 25% of the amount can be withdrawn from the account for education or treatment. After 18 years old, you can withdraw 20% of the deposit amount. You can purchase an annuity at 80% of the amount. This annuity will constitute your child’s pension and will start to be received after the age of 60.
What is the Post Office PPF Scheme?
The Public Provident Fund (PPF) scheme is managed by the government under the Post Office and is a small savings scheme. Any Indian citizen can open an account under this scheme. Most people invest in this scheme for their children as it is a long-term plan that matures after 15 years. However, you can also extend it twice for 5 years each. The annual return on this scheme is 7.1%.
Difference between PPF and NPS interest
- PPF offers an annual interest rate of 7.1% and a guaranteed income. Whereas, there is no fixed return provided in NPS. Since it is a market-linked scheme, one can expect to get an annual return of 10%.
- Under the PPF scheme, you can open an account with even Rs 500, whereas in NPS Vatsalya, you can start investing with Rs 1,000.
- PPF scheme is an investment option while NPS is a voluntary pension scheme. You will be able to withdraw 20% of the amount on maturity of NPS Vatsalya. The remaining pension has to be purchased as an annuity.
Which plan will make you a millionaire fast?
11 crore will be deposited in NPS Vatsalya from Rs.
According to PIB, Chandigarh, if you deposit Rs 10,000 every year under the NPS Vatsalya scheme, you have to keep this amount for 18 years. After 18 years, your total investment will be Rs 5 lakh. Of this, 10% return is added every year.
- If you keep this amount for 60 years and add 10% annual return, the total amount will be Rs 275 crore.
- Based on an annual return of 11.59%, these assets would be worth Rs 597 crore at the age of 60.
- Similarly, based on an annual rate of return of 12.86%, the total assets at the age of 60 would be Rs 11.05 lakh.
How many years does it take to become a millionaire with PPF?
If you invest Rs 1.5 lakh every year in the PPF scheme and after maturity of 15 years, extend it for another 10 years i.e. total 25 years, then on the basis of 7.1% interest, you will get a total of Rs 1,03,08,015.
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