The Finance Minister of India has recently launched the NPS Vatsalya Yojana, specifically designed for children. Under this scheme, parents can invest in their children’s future, ensuring financial support for their later years. On the other hand, the Public Provident Fund (PPF) remains one of the most popular investment options for children. However, many parents often feel confused when choosing between these two schemes. This article will help you decide which option is better suited for securing your child’s future.
What is NPS Vatsalya Yojana
Under this scheme, an NPS account can be opened for children below 18. To open an account, a minimum investment of ₹1,000 is required. There is no upper limit on the investment amount in this scheme.
Partial withdrawals are allowed after three years of investment and can only be made for purposes like education or medical treatment. Upon maturity, the scheme can be extended further if desired. Please note that this scheme matures after the child reaches 18 years of age.
NPS Vatsalya vs. PPF: Which Scheme Secures Your Child’s Financial Future Better?
If the amount in the NPS Vatsalya Yojana fund is less than ₹2.5 lakh, you can withdraw the entire amount. However, if the amount exceeds ₹2.5 lakh, you can withdraw only 20%, while the remaining 80% must be used to purchase an annuity. Your child will begin receiving pension benefits from the annuity amount after they turn 60 years old.
Many investors are confused about choosing between the NPS Vatsalya Yojana and the Post Office PPF scheme. Which of these two schemes provides better returns? Which investment will help build a fund worth crores in a shorter time? Such questions often arise. In this article, we will explain which of these two schemes is more effective for creating a substantial fund in less time.
Which Scheme Will Make You a Millionaire Faster?
If you deposit ₹10,000 annually in the NPS Vatsalya Yojana, and continue investing for 18 years, your total investment will amount to ₹5 lakh. With an expected annual return of approximately 10% and no withdrawals from the fund until 60 years of age, you can accumulate a total fund of ₹2.75 crore.
On the other hand, if you invest ₹1.5 lakh annually in the PPF scheme for 25 years, your total fund will amount to ₹1,03,08,015. Currently, the PPF scheme offers an interest rate of 7.1%.