How NPS Vatsalya can build wealth for your child

What is NPS Vatsalya? The biggest advantage of this scheme is that it can be opened effortlessly. Just go to any of the POPs, visit NSDL, and use the eNPS account. And put the child's name and other details, then you can start investing for them. To begin with, if you're able to put together something like Rs 1,000-10,000 on the child's birthday each year, that is good enough. You don't need to open a bank account, prepare for the KYC, or fulfil any other requirements, such as operating a minor account. The second thing is that, even in a limited manner, if you do this for 18 years, it demonstrates the long-term potential of equity—the great returns. All other government-provided investment avenues are fixed income, whether it's Sukanya Samriddhi Yojana or PPF for minors. They don't demonstrate the magic of compounding at a rate greater than equity. For starters, I'd like to see some essential improvements. The maximum allocation to equity is 75 per cent. It should be 100 per cent. You know, when you're investing for a child, and for a period of 18 years or more, why not 100 per cent? And there can't be a better design than NPS due to its low cost and secure structure. While I'd like many improvements, this is a good starting point. Suggested read: The hidden gem Is it reasonable to have the withdrawal limit set at 25 p

This article was originally published on September 27, 2024.