With the recent launch of NPS Vatsalya, the landscape of minor investment schemes has become more diverse. This new option, alongside schemes like Sukanya Samriddhi Yojana (SSY) and Public Provident Fund (PPF), offers different benefits and features.
Here’s a detailed comparison to help determine which is better for investing in a child’s future.
NPS Vatsalya is a newly-introduced scheme aimed at minors up to 18 years of age.
It offers flexibility in contributions, with a minimum of ₹1,000 required to open the account and the same amount needed for subsequent annual contributions, though there is no upper limit.
One of its key features is the ability to withdraw up to 25% of the contribution after a lock-in period of three years for specific needs such as education or illness.
On turning 18, investors can either withdraw a portion of their corpus or use it to purchase an annuity.
The Pension Fund Regulatory and Development Authority (PFRDA) has highlighted that NPS has accumulated a corpus of ₹13 lakh crore, with equity funds showing a compounding annual growth rate (CAGR) of 14.2%.
NPS Vatsalya aims to leverage the power of compounding to benefit minors, and PFRDA is working to enhance operational efficiency and address suggestions for improvement.
It requires a minimum annual contribution of ₹250 and allows a maximum of ₹1.5 lakh per year.
SSY offers a fixed interest rate, currently at 8.2%, which provides a predictable return.
Partial withdrawals are allowed for higher education after the child turns 18, and the entire corpus can be withdrawn after she turns 21.
PPF is a long-standing investment option available to all Indian citizens, including minors with a guardian.
It requires a minimum annual contribution of ₹500 and allows a maximum of ₹1.5 lakh per year. PPF offers a fixed interest rate of around 7.1%, which is stable and guaranteed.
Partial withdrawals are permitted from the seventh year, with full maturity available after 15 years.
The PPF is known for its stability and tax advantages.
The choice between NPS Vatsalya, SSY, and PPF depends on one's specific financial goals and investment preferences.
NPS Vatsalya is ideal for those seeking flexibility and potential growth, SSY is perfect for high-interest savings dedicated to girls, and PPF remains a reliable, stable investment choice.
Here’s a detailed comparison to help determine which is better for investing in a child’s future.
NPS Vatsalya
NPS Vatsalya is a newly-introduced scheme aimed at minors up to 18 years of age.
It offers flexibility in contributions, with a minimum of ₹1,000 required to open the account and the same amount needed for subsequent annual contributions, though there is no upper limit.
One of its key features is the ability to withdraw up to 25% of the contribution after a lock-in period of three years for specific needs such as education or illness.
On turning 18, investors can either withdraw a portion of their corpus or use it to purchase an annuity.
The Pension Fund Regulatory and Development Authority (PFRDA) has highlighted that NPS has accumulated a corpus of ₹13 lakh crore, with equity funds showing a compounding annual growth rate (CAGR) of 14.2%.
NPS Vatsalya aims to leverage the power of compounding to benefit minors, and PFRDA is working to enhance operational efficiency and address suggestions for improvement.
Sukanya Samriddhi Yojana (SSY)
SSY is designed specifically for the girl child, available for account openings until the child turns 10.
It requires a minimum annual contribution of ₹250 and allows a maximum of ₹1.5 lakh per year.
SSY offers a fixed interest rate, currently at 8.2%, which provides a predictable return.
Partial withdrawals are allowed for higher education after the child turns 18, and the entire corpus can be withdrawn after she turns 21.
Public Provident Fund (PPF)
PPF is a long-standing investment option available to all Indian citizens, including minors with a guardian.
It requires a minimum annual contribution of ₹500 and allows a maximum of ₹1.5 lakh per year. PPF offers a fixed interest rate of around 7.1%, which is stable and guaranteed.
Partial withdrawals are permitted from the seventh year, with full maturity available after 15 years.
The PPF is known for its stability and tax advantages.
Which is better?
The choice between NPS Vatsalya, SSY, and PPF depends on one's specific financial goals and investment preferences.
NPS Vatsalya is ideal for those seeking flexibility and potential growth, SSY is perfect for high-interest savings dedicated to girls, and PPF remains a reliable, stable investment choice.
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