For investors, the primary goal of investing is to generate returns and secure their financial future. Along with achieving personal financial goals, many investors also strive to make their children financially secure through their investments. Making sound financial decisions early on can help create a substantial corpus for your children. Investing in the best children's mutual fund is a way through which you can achieve this. Read on to learn more.
A children’s mutual fund is an investment option that specifically caters to children and their financial future. These funds are similar to other mutual funds but come with a 5-year lock-in period or till the child reaches adulthood. Here are some of the top mutual funds for a child that you can invest in.
The top children's mutual funds based on the 3-year annualised returns.
(Data as of January 31, 2025)
Fund Name |
3-year Annualised Returns |
SBI Magnum Children's Benefit Fund Investment Plan Direct-Growth |
20.46% |
16.02% |
|
15.85% |
|
13.22% |
|
12.17% |
|
12.08% |
|
11.73% |
|
10.70% |
Here are some key details about the best mutual funds for children.
(Please note, the data is as of January 31, 2025)
There are several significant advantages to investing in the best children’s mutual funds.
For investors, growing their corpus and generating wealth is a key goal. By investing in a children’s mutual fund, investors can park the funds for the long term and provide a substantial sum for their children, securing their financial future.
Most children’s mutual funds have a lock-in period of 5 years. Any early withdrawals may attract penalties and fines which may impact any potential gains. As a result, investors are more likely to stay invested for the long term and follow a disciplined investment approach.
Investing in instruments such as a children’s mutual fund benefits the investor by way of tax benefits under Section 80C of the Income Tax Act. As a result, this investment is not only a good way to grow your funds but also enjoy tax benefits.
The primary goal and advantage of a children’s mutual fund is that it is a useful tool to secure your child’s future. The capital appreciation of a children’s mutual fund can enable your child to pursue further education or kick-start a career.
A children’s mutual fund also offers flexibility to investors. They can decide on the investment tenure as these funds usually have a 5-year lock-in period or till the child reaches adulthood. This allows the investors to plan their investments according to their financial goals. Moreover, ownership of a children’s mutual fund can also be transferred to the child once they reach adulthood after completing the necessary KYC requirements.
Here are some key points that one should consider before investing in a children’s mutual fund.
Conclusion
As a parent, investing in the best children’s mutual fund can be a significant decision that can provide a bright future for your child. These funds not only encourage an investor to stay invested but also gain from capital growth and tax benefits. Carefully compare different funds, their performance, and the lock-in period before making your investment decision.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS
Vaishnavi Tech Park, South Tower, 3rd Floor
Sarjapur Main Road, Bellandur
Bengaluru – 560103
Karnataka
Contact Us