Parents love to invest in a minor child’s name to show love and affection. A favorite is investing in mutual funds in a minor child’s name. You can invest in any mutual fund scheme of any mutual fund house like Axis Asset Management Company Ltd, Baroda Asset Management India Limited, Canara Robeco Asset Management Company Limited, BOI AXA Investment Managers Private Limited and so on.
If you invest in mutual fund in a minor child’s name, he/she remains the first and sole holder of mutual fund folio. No joint holders are allowed for mutual fund investment in the minor’s name. Parents could be the guardian or there would be a court-appointed guardian.
To invest in mutual funds in a minor child’s name, give a child’s DOB and age. Offer a copy of age proof like a birth certificate, passport copy and so on. This shows age proof and also the relationship with the guardian. Do this while opening the mutual fund folio or before making the first investment. You can register SIP or STP instructions in a mutual fund folio, held in minor child’s name. This is valid only till the minor attains maturity. (Becomes 18 years of age). Systematic Investment Plan or SIP is where you invest small amounts regularly in mutual fund schemes of choice. Start a SIP with just Rs 500 a month. Systematic Transfer Plan or STP is a method of moving money from one mutual fund to another.
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Let’s take a look at the rules SEBI has framed for investments by minors in mutual funds.
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