Post demonetisation, piggy bank money accumulated by kids as gifts is finding its way to their respective bank accounts. Experts suggest parents use this money fruitfully and invest it in mutual funds in the name of the minor child. They can start with amounts as little as Rs 500.
1. Is a MF investment possible in the name of a minor child?
Yes, you can make an investment in any scheme of any fund house of a mutual fund (MF) in the name of a minor child.
The minor shall be the first and the sole holder in such a folio. No joint holder will be allowed in this folio. The guardian in the folio should be ei ther parent or a court-appointed legal guardian.
2. Documents required to make an investment?
Minor investments are identified by the date of birth of the investor, and so, while making an in vestment, you have to provide the child’s date of birth and age. In addition to this, you will have to give a copy of the age proof, which can be birth certificate, passport copy , etc. evidencing date of birth of the minor and relationship of the guardian (natural or le gal guardian) with the minor. This needs to be provided while making the first investment or while opening a folio.
3. Can I even start a SIP or STP in the name of a minor child?
Yes, a mutual fund will also register instructions by an investor like SIP, STP in a folio held by a minor. However, this instruction will be valid only till the date of the minor attaining majority , even though the instructions may be for a period beyond that date.
4. What happens when the minor child becomes a major or attains 18 years of age?
When a minor becomes a major all transactions standing instructions systematic transactions etc. will be suspended. The folio will be frozen for operation by the guardian from the date of minor attaining majority . Prior to the minor attaining majority , the AMC mutual fund will send a notice to unit holder at their registered correspondence address advising the minor to submit, on attaining majority , an application form along with prescribed documents to change the status of the folio from `minor’ to `major’. Along with this, KYC Acknowledgement Letter of the unit holder becoming major should also be provided.
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