How to invest in children mutual funds

Are you planning to invest on the name of your minor son or minor daughter? Then the question “What should I do if I am investing on the name of my minor child” must have arisen in your mind. Have a glance at rules and procedure of investment in mutual funds on the name of child less than 18 years of age.

The parents or guardian of a minor child can invest in mutual funds by his name. But this concept has some rules and regulations which should be followed. Investment in mutual fund for children can be done easily if you keep these rules in mind.

Rules to invest in mutual funds for children

1. Only natural guardians (parents) or legal guardians as appointed by court can invest in mutual funds on the name of minor. You have to mention the date of birth of the minor along with the attachment of birth certificate/ passport/ school leaving certificate with the application form.

2. You can also invest on the name of minor via Systematic Investment Plan (SIP). But, mutual fund will follow your directions on SIP, Systematic Transfer Plan (STP) or Systematic Withdrawal Plan (SWP) in portfolio of minor only until he does not attain the age of 18.

3. Guardians can operate such account only until he is less than 18 years. When he attains the age of 18 and turns into major, then mutual fund demand some documents for this purpose.

4. Mutual fund company sends an interim notice on the registered correspondence address a few days before the 18th birthday of the person. This notice contains suggestions to minor and his parents to apply with mentioned relevant documents for converting the legal status of the account on name of an adult (previously minor).

5. The above mentioned notice clearly specifies that all deals and guidelines by guardian for SIP, STP and SWP will collapse as and when the minor will turn into an adult. Not only this, all rights of guardian also gets finished on attaining his age to 18.

Expert advice- What should be done if you had invested on the name of your minor child and now he/she is turning into an adult or attaining the age of 18

Guardian/ investor should deposit the duly filled service request form or letter with the finance company. This form or letter should be accompanied with details of fund, name of adult (investor), folio number and KYC acknowledgement. The signature of the minor should also be verified by bank authorities.

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