Should you invest in NPS Vatsalya?

Among the long list of memorable announcements made in July's Union Budget, NPS Vatsalya ranks high. A product that allows you to plan your child's retirement was bound to turn heads. Also, it's hard to ignore the allure of long-term compounding. For example, beginning with small contributions in NPS Vatsalya at a young age, say Rs 500 per month, can grow significantly. Assuming an average return of around 12 per cent, a contribution starting at age five could reach Rs 5 lakh by 25. Even if you stop making fresh investments at 25, the amount will compound to Rs 28 lakh by age 40.