Talking to your children about money is as important as talking to them about the benefits of healthy eating and exercise. This needn’t be a forced conversation, rather an understanding that flows naturally. A part of this learning is also understanding wealth creation through efficient allocation of money.
Or in other words,. The best way to teach anyone about this is to get them to !
offer the most flexible and convenient form of for wealth creation, but can children also ?
Children investing in MFs
Children below 18 years canthrough a parent or a guardian. What this means is that the in a scheme will be made in the child’s name but with representation from the parent or a guardian. The child will be the account holder and owner of the scheme, the parent or guardian is the person required to sign off on transactions.
This remains the case until the child turns 18, after which the minor account holder status has to be changed to an adult. This requires clear official communication to be sent to the fund house. Till the account is operated by the parent or guardian, any tax arising from redemption or receipt ofwill have to be paid by the parent/guardian.
The child or minor does not have the responsibility to pay this. Hence, while the child is the owner of the scheme, all legal responsibilities lie with the parent guardian.
A minor or a child can invest in any of the mutual fund schemes available to an adult as well.
Where to invest
There are a few ‘children’s gift fund’ or ‘child care plan’ or a similar nomenclature with the word child or children in it. However, these aren’t the only schemes your child can in. A minor or a child can in any of the schemes available to an adult as well.schemes named as
The specific schemes mentioned above are typically structured as a mix ofand fixed income securities with primary exposure of 60%-70% in stocks. Usually, when you in a child’s name, you have at least a few years before you need the money. You may choose a hybrid portfolio of and debt securities, but if you have at least 7-10 years before the money is to be used, it’s better to choose a good quality pure scheme as the risk-return tradeoff over this long term duration is better.
Choose schemes with a good long-term track record of performance consistency rather than looking for the best performer within thecategory. Let your child in this regularly through or .
Starting theirjourney early in life is the best gift you can give your child to be prepared for what the future holds.