Recently, we were asked by one of our investors whether they can invest for their household help through SIPs just like they were doing for their own investments. First of all we laud these efforts because they give a boost to financial inclusion for everyone in a very concrete way.

Now coming to the question of whether investors, much like yourself, can do something like that. Yes, you can and here is how you can go about it.

1. First you are going to need a bank account for them. Typically, the Jan Dhan account opening is an easy process and also quite apt. What you will need is a PAN Card and ID Proof (Aadhaar, etc). The primary advantage for those opening the account, is that they can have an account with minimal balance and an ATM Card. Net banking can also be enabled.

2. The next step is to open an investing account for them through a mutual fund platform. Make sure the investments are in the name of the individual for whom you are investing. In many cases, we have seen many park money with some known person as cash and unfortunately they never get to see the money again.  It is a good idea to teach them Net Banking on the phone (smartphones are becoming quite common after all) and about ATM Card usage.


Decide on appropriate asset allocation. Quite often the primary needs are what you would call emergency funding needs. If you open an account via Scripbox, we suggest that you maintain some investments in the ‘Emergency money’ category, for them.

As you want them to save for the long term, a good portion of the savings can be in Long Term Equities and thus invested in good set of diversified equity mutual funds.

4. Help them understand cash flow. The first thing in achieving this is to encourage regular savings. Help them understand the importance of ensuring that a portion of their monthly earnings are saved and these savings are invested properly. Any annual bonus, or extraordinary inflows, can be used to ramp up savings. We have seen quite a few individuals provide a one-time bonus to encourage the savings habit.

5. Don’t forget Insurance. In many such situations, healthcare related costs for the family (both direct family and parents) tends to be a key reason why people, especially those from financially weaker sections of society, are not able to save. Taking a health care family policy, however small, will help them stave off one of the most common reasons they end up losing their savings. There are government schemes these days which cover health care at low costs and these are a good option for them to consider.