NPS Scheme: Invest ₹10,000 Annually and Build a ₹11 Crore Retirement Fund – Here's How!
Nov 30, 2024, 22:18 IST
| The National Pension Scheme (NPS) is an excellent long-term investment option for securing your retirement or creating a robust financial corpus for your child’s future. Here’s a simple breakdown of how small investments in the NPS Vatsalya Yojana can grow into a significant retirement fund.
What is NPS Vatsalya Yojana?
- This scheme allows parents to invest in their child’s name for long-term financial planning.
- Managed by the Pension Fund Regulatory and Development Authority (PFRDA), it promotes early savings for children’s future needs like education, marriage, or business.
How Does It Work?
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Start Early
- Open an account for your child (below 18 years).
- Convert it into a regular NPS account when the child turns 18 or withdraw as per rules.
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Flexible Investments
- Minimum annual contribution: ₹1,000.
- No upper limit on contributions.
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Partial Withdrawals
- After three years, withdraw up to 25% of the corpus for education, treatment, or critical needs.
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Reinvestment Rules
- Upon maturity, 80% of the corpus is reinvested in an annuity plan.
- Withdraw up to 20% as a lump sum.
How ₹10,000 Can Grow Into ₹11 Crore?
Assumptions for Calculation:
- Investment: ₹10,000 per year.
- Duration: From age 18 to retirement (60 years).
- Rate of Return (RoR): 12.86% (historical average based on 75% equity and 25% government securities).
Growth Over Time:
Age | Corpus Value at Different RoRs |
---|---|
18 | ₹5 Lakh (10% RoR) |
60 | ₹2.75 Crore (10% RoR) |
60 | ₹5.97 Crore (11.59% RoR) |
60 | ₹11.05 Crore (12.86% RoR) |
Note: Figures are estimates based on historical returns and may vary depending on market conditions.
Key Benefits of the NPS Vatsalya Scheme
- Tax Savings: Contributions are eligible for tax deductions under Section 80C and 80CCD.
- Wealth Creation: Offers high returns through equity allocation for long-term growth.
- Financial Security: Ensures a stable retirement fund or support for children’s future.
Who Should Opt for NPS Vatsalya?
- Parents planning for their child’s future education or marriage.
- Individuals aiming to create a significant retirement corpus with disciplined investments.
Take the First Step Today!
Secure your future or your child’s financial goals with NPS Vatsalya Yojana. Small, consistent contributions can grow into a massive fund over time. Start now and reap the benefits later!