Do you know how you can invest in mutual funds for kids?

New Delhi: Mutual funds are considered a better investment option in longer terms. Compounding is earning returns from existing returns. Because of compounding, with time, your investments for kids grow at a relatively faster pace as compared to the scenario when you invest late. So, the earlier you start to invest, the better mutual fund returns you are going to get. Mutual funds help investors diversify unsystematic risks by investing in a diversified portfolio of stocks across different sectors.

Minors can invest in Mutual Funds with the help of a guardian. The minimum age to invest in mutual funds in India on one’s account is 18 years. There is no specification for a maximum age to invest in mutual funds in India.

Apart from this, one must keep the following points in mind:

1. Documents required for a minor’s investment in a mutual fund would be either of the following: Birth certificate, mark sheet, or leaving certificate from the HSC board of respective states, ICSE, CBSE, etc., minor’s passport, or date of birth proof.

2. As per AMFI regulations, in case of modification in the minor’s guardian, because of a mutual decision between the parents or because of the death of the current guardian, one would require these documents.

3. Form for modification in the guardian in the MAM Application form together with KYC and PAN of the newly appointed guardian.

4. A letter of consent from the existing guardian in case the cause is not the guardian’s demise.

5. Certificate of Death, in case applicable.

6. Name and signature of the newly made guardian should be registered with the bank account of the minor.

7. When the child becomes a major, they need to apply for the same in the MAM form and the specified documents. Before submitting the MAM form, the unitholder should obtain a PAN, satisfy the KYC requirements, change the current bank account status, or open a fresh bank account. A fresh SIP, STP, SWP mandate in the prescribed form (to continue the SIP, STP, SWP, if applicable.) The account shall be frozen till the procedure is completed.

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