How to invest in Mutual fund in a minor child name?

How to invest in Mutual fund in a minor child name?

Minor children are allowed to invest in mutual Funds represented by parents or court appointed legal guardian. Minor shall be the Sole Holder of the folio and will be operated by the guardian. 

Documents required for making investment in minor child name

•  Birth certificate, Passport Copy or any officially valid documents for ascertaining date of birth and age of child.
•  Photograph of Child for identification.
• Proof evidencing the relationship of guardian and KYC Documents of guardian (PAN Card, Address proof and photograph).
• Payment Instrument from Minor account or guardian for effecting investment.

Steps to be followed for investing in Mutual Funds:

• Application for creating mutual folio along with self-attested copies of documents mentioned above shall be handed over to AMC.
• Guardian shall comply CKYC mandatory for investments in minor child.
• Only Offline applications are allowed for investment in minor child name.

Operation of mutual fund folio:

• Guardian can operate the mutual fund folio till the minor child turns 18. However, from the date of attaining majority, all transactions in the mutual fund account are freezed until the status of the folio is changed from minor to major.
• AMC can also register instructions 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. 

On attaining majority:

• Application form along with KYC documents for changing the status of the folio from minor to major is to be submitted to AMC.
• On CKYC Completion, Folio will be activated for further investments.
• SIP/STP instructions have to be registered again for the folio.

Mentotax recommends starting a SIP in your child name and watch the wealth grow as the child grows.

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Are you saving enough for your child future?

Are you saving enough for your child future?

Children’s day is round the corner and it will be the precise time to think about the children’s future. Children’s play a huge role in everyone life. Parents play supportive role in every phase of the child. It’s up to us to create the secure future for child by identifying the goals and planning to achieve it by investing systematically.

Mentotax has identified major financial goals for securing child future that needs to be given importance.

Short Term Goals
Goal	Amount Required Now	Time Horizon	FV	Savings Required	Invest In
Baby Functions/ First Birthday	₹ 2,00,000	1	₹ 2,10,000	₹ -16,868	Liquid & Overnight Funds/RD/FD
School Start	₹ 3,00,000	3	₹ 3,47,288	₹ -8,567	Liquid & Overnight Funds/RD/FD
Long Term Goals
Goal	Amount Required Now	Time Horizon	FV	Savings Required	Invest In
Coaching Class for NEET/IIT	₹ 3,00,000	15	₹ 6,23,678	₹ -1,248	Dynamic Asset Allocator/BAF
Children Graduation	₹ 20,00,000	17	₹ 45,84,037	₹ -6,932	Equity & Equity Diversified Funds
Children Post Graduation	₹ 35,00,000	21	₹ 97,50,869	₹ -8,649	Equity & Equity Diversified Funds
Children Marriage	₹ 75,00,000	25	₹ 2,53,97,662	₹ -13,518	Equity & Equity Diversified Funds

There are various avenues to invest for child future, Recurring Deposit, Fixed Deposit, Sukanya Samriddhi Yojana, Post office savings, Mutual Funds, Endowment and ULIP, Public Provident Fund, Gold, Equity Linked Savings Scheme, Child Gift Funds.

Example Child Higher Education:

Assume after 17 years you want to send your child for higher education which costs Rs 20 lakh today. To save Rs 20 lakh after 17 years, assuming a return of 12 per cent, you need to save monthly SIP of Rs 2650. But on considering inflation of 5 per cent, will bring Rs 20 lakh to Rs 8.75 lakh after 17 years. Therefore, before starting to save for your long term goal, make sure you have estimated the inflated cost and then do SIP.

In the above example, Rs 20 lakh after 17 years at an assumed 5 per cent inflation and at expected return of 12% will actually cost you Rs 45.85 lakh. Now to achieve it, you actually need to do SIP of Rs 7000 instead of Rs 2650.

Mentotax recommends you to invest in equity considering the longer time horizon. Mentotax suggests you consider inflation, expected return based on the products before starting the investment. To achieve the financial goals and secure the child futures start investing early and enjoy the benefits of compounding.

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Liquid Funds are not so liquid anymore!

Liquid funds are debt funds that invest money in short-term market instruments such as treasury bills, government securities and call money. These funds invest in instruments up to maturity of 91 days. Liquid Funds are the best avenue to park idle funds, where investor can earn better returns with low risk.

Liquid funds were offering liquidity for the investments without any restriction on exit load. The Securities and Exchange Board of India (Sebi) has introduced graded exit load structure on liquid funds. From now all the investments withdrawn before seven days from date of allotment attracts exit load as per the schedule.

Days	Day 1	Day 2	Day 3	Day 4	Day 5	Day 6	FromDay7
Exit Load	0.0070%	0.0065%	0.0060%	0.0055%	0.0050%	0.0045%	NIL

Graded exit load was imposed to regulate the inflows and outflows of funds by Institutional investors. This move will reduce the risk for the retail investors.

Liquid Funds are best for parking the emergency corpus with minimal risk and better returns. Mentotax advises to invest in liquid funds only if you can hold more than 7 days. Enjoy more liquidity with Overnight funds.

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