Mutual Funds vs. NPS Vatsalya: Several parents opt for both NPS and mutual funds depending on their investment objectives. Let us know which one would be the best in securing the future of your child.
Mutual Funds vs. NPS Vatsalya: Investing in a child’s future is a prudent decision, and it needs proper planning along with an investment strategy. The schemes already in place are the National Pension System Vatsalya, recently introduced to add a chance for the future of children, and mutual funds. Therefore, it becomes pertinent which one to choose. According to financial experts, both schemes work on two different agendas. Purely the right choice depends on your financial goals, risk tolerance, and tax considerations. While the various mutual funds might promise greater returns, NPS Vatsalya is comparatively inexpensive.
NPS Vatsalya Vs. Mutual Funds
The NPS Vatsalya Yojana is a pension scheme that provides children with financial ability and future stability by opening pension accounts in the name of their children. All contributions made under this scheme qualify for compound interest. A minimum investment of Rs 1000 a year is required to open an account, while any amount of investment is accepted.
NPS Vatsalya would provide an avenue for parents to save for the future for their kids by investing in a pension account along with long-term wealth with the benefit of compounding. Flexible contributions and choices in investment will be available under NPS Vatsalya and would allow parents to make an annual investment of Rs 1,000 in the name of the child and thereby reach all sections of families.
Children’s Mutual Funds are designed to create wealth over a long period. The schemes mandatorily carry a lock-in till the completion of five years or till the child attains majority, whichever is earlier. The minimum investment can be made with an amount of Rs 100 per month.
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Which One Is Better?
Experts at financial advice say that NPS presents diversification options among equities, corporate bonds, and government securities. Mutual funds provide an opportunity to make choices from schemes according to the risk appetite that suits you. Equity funds carry a higher risk, but so does the potential return.
Mutual fund investment usually yields better returns than the above two. Both NPS and equity mutual funds are considered good options for long-term wealth accumulation. The choice between the two depends on financial goals, risk capacity, investment horizon, and benefits in terms of tax advantage.
