Yes, one can invest in a mutual fund on behalf of a minor kid by his parents or legal guardian. Investment and account operation can be done by a guardian until the minor attains the age of majority.
Any standing instructions such as SIP, SWP, STP in a minor folio will be valid till the minor attaining majority.
4 Points to look while opening an account
- The minor shall be the first and the sole holder in an account.
- There shall not be any joint accounts with minor as the first or joint holder.
- Only natural guardian (i.e. father or mother) or a court appointed legal guardian are allowed.
- Information on the relationship/status of the guardian as father, mother or legal guardian need to be submitted.
Documents required to open an account;
- Date of birth of the minor along with photocopy
- Birth certificate of the minor, or
- School leaving certificate
- Mark sheet issued by Higher Secondary Board of respective states, ICSE, CBSE etc., or
- Passport of the minor, or
- Any other suitable proof evidencing the date of birth of the minor.
What happens when the Minor attains Majority?
The mutual fund company will send an advance notice to the registered correspondence address asking to submit an application form along with prescribed documents.
A guardian cannot make any investments or give any standing instructions once the minor attains majority. There will be no transaction till the documents are submitted and status is changed.