Often parents feel that schemes like Sukanya Samriddhi Yojana or NPS Vatsalya Yojana will make the future of their children financially safe. In these schemes, large figures like Rs 69 lakh or Rs 1.4 crore are shown in these schemes. But are these figures really equally beneficial?
Financial planner Gaurav Mundra recently caught attention in a linkedin post. He is an Associate Partner of ETCA Wealth and co-founder of S&P Financial Services and make an economic plan of more than 1,000 families. According to him, people are happy to see the big numbers of these schemes, but do not understand the effect of inflation.
How does the real value eliminate inflation?
Mundra says that Sukanya Samriddhi Yojana can get 69 lakh rupees, but understanding the inflation of 21 years, its real price today is about 17 lakh rupees. Similarly, the NPS Vatsalya scheme has a promise of Rs 1.4 crore, but on retirement you get only 35 lakh rupees, whose value is equal to only 8.4 lakh rupees. Now think yourself, after 20 years 8 lakh or 17 lakh rupees will be enough for your child’s education or marriage.
What is better option?
According to Gaurav Mundra, Children Mutual Funds can be a better option. If you consider an annual return of 12%, then this fund can reach Rs 1.4 crore, which will be about Rs 1.2 crore even after tax.
If you look at it at today’s prices, then it will be equal to about 34 lakh rupees. Apart from this, it also has flexibility – if you want, withdraw 17 lakh rupees at the age of 21 and then at the age of 26, Rs 34 lakh.
Inflation has a direct impact on your purchase power. For example, the goods you can buy for 500 rupees today will become expensive in the coming few years, and less things will be found for 500 rupees.
A little inflation is cured for the economy, but when inflation increases rapidly, it becomes difficult for the common people. It is very important to invest for the future of children, but the plan taken in mind without inflation can also give disappointment in future. Therefore, understand the real value of plans and invest accordingly.
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