NPS Vatsalya: If you invest a small amount every year in your child's name, this investment can grow into a fund worth crores in the long term. The NPS Vatsalya scheme proves to be very useful for your child's future.

The NPS Vatsalya account is opened entirely in the child's name, but it is operated by the parents or guardians. The investment made in this account remains linked to the market for a long time, which provides the benefit of compounding. This is why even a small amount can grow into a large fund over time, which will be useful for the child's major needs later on.

When the child turns 18, this account can be converted into a regular NPS account. If the parents wish, they can also exit the scheme at age 18. However, there is a condition that at least 80% of the maturity amount must be invested in an annuity plan. Only 20% of the amount can be withdrawn as a lump sum.

The biggest advantage of the NPS Vatsalya scheme is that it creates long-term financial security for the child. This not only builds a strong fund for the future but also develops a habit of regular investment in the parents. This fund can later become a strong foundation for the child's education, business, or retirement planning.

This scheme can also significantly reduce the burden of parents' financial responsibilities. Because when the child grows up, a large corpus will already be available in their name. At the age of 18, the account can be converted into a regular NPS account by updating the KYC. If the total amount is less than ₹2.5 lakh, the entire amount can be withdrawn.

Let's say you invest ₹10,000 every year in your child's name. If this investment continues for 18 years and earns an average return of 10%, a fund of approximately ₹5 lakh can be created by the time the child turns 18. If the investment continues from there, this amount can multiply many times over. If this investment continues until the age of 60, the corpus could grow to approximately ₹2.75 crore at a 10% return. At an average return of 11.59%, it could reach around ₹5.97 crore. And with a 12.86% return, the same annual investment of ₹10,000 could grow to approximately ₹11.05 crore.