When it comes to planning their children’s financial future, many Indian parents rely on schemes like Sukanya Samriddhi Yojana or NPS Vatsalya Scheme. These plans often promise impressive returns — ₹69 lakh or even ₹1.4 crore at maturity. But financial experts warn: these numbers can be misleading if you ignore one critical factor — inflation.
Financial planner Gaurav Mundhra, Associate Partner at Etica Wealth and Co-founder of S&P Financial Services, recently raised an important concern in a LinkedIn post. According to him, many families fall into the trap of feeling financially secure simply by looking at the projected maturity amount in these savings plans. But once inflation is factored in, the real value of that money significantly drops.
Take the Sukanya Samriddhi Yojana for example. While it might yield ₹69 lakh after 21 years, its actual value, after adjusting for inflation, is roughly ₹17 lakh in today’s money. Similarly, the NPS Vatsalya Scheme may promise ₹1.4 crore, but at the time of retirement, the one-time payout is closer to ₹35 lakh — which equates to just ₹8.4 lakh today.
Think about it — can ₹8 lakh or ₹17 lakh really cover your child’s higher education, wedding, or other major life expenses 20 years down the line? Most likely not. That’s why experts advise against basing your investment decisions purely on the final maturity figure shown in promotional brochures or calculators.
Inflation reduces the purchasing power of your money over time. What you can buy today for ₹500 may cost you ₹1,000 or more in two decades. This means that unless your investments grow at a rate higher than inflation, you’ll end up with less real value, no matter how large the final amount may seem.
A moderate rate of inflation is considered healthy for the economy, but when it outpaces the returns on your savings, it erodes your wealth. This is why relying solely on traditional fixed-return savings schemes may not be the wisest choice for long-term goals like your child’s education.
Mundhra suggests a more flexible and potentially rewarding route — Children’s Mutual Funds. Assuming a 12% annual return, your investment could grow to ₹1.4 crore in nominal terms, and still leave you with around ₹1.2 crore post-tax.
When adjusted to today’s purchasing power, that’s approximately ₹34 lakh, which is double what traditional plans offer after inflation. These funds also provide flexibility — you can withdraw ₹17 lakh at your child’s age of 21 and still leave the remaining amount to grow until they’re 26, for instance.
It’s essential to invest in your child’s future — but you must do it wisely. Always consider:
The actual purchasing power of the maturity amount.
Inflation-adjusted returns, not just big numbers.
Flexible, high-growth options like mutual funds.
Consulting with a certified financial planner before investing.
Don’t let attractive numbers in brochures or advertisements fool you. ₹69 lakh or ₹1.4 crore may sound like a lot today, but 20 years from now, their actual worth could leave you unprepared for your child’s real needs. Understand the true value of money over time and plan your investments accordingly.
