Below is a detailed comparison to help determine which is best 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 main features is the possibility of withdrawing up to 25% of the contribution after a three-year lock-in period for specific needs such as education or illness.
Upon turning 18, investors can withdraw a portion of their capital 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 compound annual growth rate (CAGR) of 14.2%.
NPS Vatsalya aims to harness the power of compounding to benefit minors, and PFRDA is working to improve operational efficiency and address suggestions for improvement.
Sukanya Samriddhi Yojana (SSY)
SSY is designed specifically for girls and is available for account openings until the girl turns 10 years old.
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 8.2%, providing predictable returns.
Partial withdrawals for higher education are allowed after the child turns 18, and the entire corpus can be withdrawn after the child turns 21.
Public pension fund (PPF)
PPF is a long-term investment option Available to all Indian citizens including minors with 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 allowed starting in the seventh year, and full maturity is 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 looking for flexibility and potential growth, SSY is perfect for high-interest savings dedicated to girls, and PPF remains a reliable and stable investment option.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.