It is time to teach the kids where to keep savings of their pocket money or the money they received from relatives as gifts. For fruitful results, it is better to invest that in mutual funds than keeping that in a savings account or a piggy bank. There are many schemes where they can start with a few of Rs 500
Is it possible to invest in Mutual Funds in the name of a minor?
Yes, you can investment in a Mutual Fund in the name of a minor child in any scheme there is no age limit to invest in a Mutual Fund. With a parent or a court-appointed legal guardian as guardian and minor as a first sole holder can make a portfolio and invest.
Read Also: Types of mutual funds in India
Documents required to make an investment
while making the first investment or while opening a portfolio. As a minor will not have Documents such as Driving licence or Voter identfication card so, while making an investment to provide the child's date of birth, age and relationship of the investor's guardian. As a proof You can provide Documents such as Birth certificate, Passport copy, Aadhar Card etc. as an evidencing for date of birth of the minor and relationship of the investor's guardian (parent or legal guardian) with the minor.
SIP or STP in the name of a minor child
You can go for SIP(Systematic Investment Plan) STP(Systematic Transfer Plan) in the portfolio of a minor child. These instructions by an investor a mutual fund will also register. But these instruction are valid till the date of the minor attaining majority, even though for few schemes the instructions are for a period beyond that date. These things are dependent upon the schemes.
When the minor child becomes a major?
Until a minor child becomes attains 18 years of age MF's will be operating by the guardian. So The folio will be frozen for operation by the guardian from the date of minor becomes major. All transactions standing instructions systematic transactions etc. all will be suspended and a notice will be received at their registered correspondence address advising the minor to submit an application form along with prescribed documents to change the status of the folio from 'minor' to 'major'. Along with KYC Acknowledgment Letter of the unit holder becoming major should also be provided
So that Mutual fund to take necessary actions and give access to transactions standing instructions systematic transactions etc to mutual fund sole holder.