What is the minimum age for investing in Mutual Funds? Can a fifteen-year-old invest in mutual funds?Asked
There is no minimum age to invest in mutual fund. But to invest on your own, you need to be 18 years.
If you are below 18 years,
When you turn above 18 years,
It is very wise decision to start investing in mutual funds at younger age. Even with a small investment, power of compounding kicks in and money grows like crazy.
Yes, minors can invest in Mutual Funds through a guardian.
The minor willing to invest in mutual funds can do so in his name and he will be first and sole holder in such a folio. This means that there can be no joint holder in this fund. The guardian can be either of the parents or a court appointed legal guardian.
Proof of date of birth and age will need to be submitted at the time of starting the mutual fund. Birth certificate and copy of passport are generally accepted as evidence of date of birth of the minor and relationship of the guardian with the minor.
Moreover, instructions like SIP, STP can also be given by the investor, though such instructions will only be valid till the time the minor attains majority, irrespective of whether such instructions were given for a longer period. Upon the minor attaining majority, all standing instructions relating to the mutual fund of the minor will be suspended and the folio will be frozen for operation by the guardian. Before the minor attains majority, the mutual fund house will send a notice to the unit holder at his registered address, advising the minor to submit an application form along with prescribed documents to change the status of the folio from 'minor' to 'major' upon his reaching age of majority. KYC Acknowledgement Letter of the unit holder becoming a major also needs to be provided.
The guardian can also be changed during the minority of the investor. However, even then, the new guardian must be the investor's parent or a court appointed guardian and must submit a No Objection Certificate (NoC) or Consent Letter from the existing guardian or court order, if they are alive and KYC Acknowledgement Letter of the new guardian.
Hope this answers your question.
Yes you can open a mutual fund account for a minor through a custodial account which is overseen by a guardian. The decision making power lies with the guardian until child reaches the legal age 18.
Minor accounts can be started with amount as little as ₹500. Following documents are required for opening an account:
When the child reaches the age of 18, the operational rights of the guardian are frozen and the rights are transferred to the child. The asset management company will send you a notice when there is a need for transfer of ownership. An application form has to be filled out to change the status of account from ‘minor’ to ‘major’ along with required documents which also includes KYC.
If you are considering investment for your girl child, please read the detailed benefits of the Sukanya Samriddhi Scheme along with the investment returns calculator.
The minors can definitely invest in Mutual Funds with the authorized guardian acting as the custodian of the minor.
No joint holder will be allowed with the minor. The custodian can be either o the parent or the authorized guardian appointed by the court.
Following documents need to be provided:
· Birth Certificate
· Passport copy of the photo
· Relationship of the minor with the custodian needs to be stated in the form
Prior to the minor attaining majority, the Mutual Fund will send a notice to unit holder at their registered correspondence address advising the minor to submit, on attaining majority, an application form along with prescribed documents to change the status of the folio from minor to major. KYC acknowledgement letter of the unit holder should also be provided.
All other things remain the same. A minor can also invest through lumpsum, SIP mode just like any other investor.
One can invest at anytime in mutual funds. However considering minors, below the age of 18, the investment needs to be made in their name by their parents or legal guardian.
Certain documentation procedure needs to be followed when minors are investing in mutual funds.
Minor investments are identified by the date of birth of the investor, and so, while making an in vestment, you have to provide the child's date of birth and age. In addition to this, you will have to give a copy of the age proof, which can be birth certificate, passport copy , etc. evidencing date of birth of the minor and relationship of the guardian with the minor. This needs to be provided while making the first investment or while opening a folio.
Next question might come to your mind, what happens to a minor child's mutual fund when he/she becomes a major?
When a minor becomes a major all transactions standing instructions systematic transactions etc. will be suspended. The portfolio will be frozen for operation by the guardian from the date of minor attaining majority .
Prior to the minor attaining majority , the AMC mutual fund will send a notice to unit holder at their registered correspondence address advising the minor to submit, on attaining majority , an application form along with prescribed documents to change the status of the folio from `minor' to `major'. Along with this, KYC Acknowledgment Letter of the unit holder becoming major should also be provided.
Yes, minors can invest in mutual funds by themselves or their parents/guardians can invest in mutual funds in the name of their minor child/children. Moreover investing in mutual funds is a very good idea, that early, due to long term compounding benefits of investing.
Following points should be kept in mind-
· Minor should be the first and sole holder of the particular mutual fund folio. No joint holding is allowed.
· However, guardian for this particular folio should necessarily be parent or court appointed legal guardian.
· One can also invest via SIP, wherein the amount to be debited can come minor’s own bank account or parent’s/guardian’s bank account.
· However, a minor on attaining the age of 18 years, shall become an investor and all SIP shall be discontinued automatically. Person will have to go through the KYC process to restart the SIP.
· Documents required- Proof of age and date of birth.
· Income from dividend and capital gains- Any such income from investment shall be clubbed with the parent’s/guardian’s income.
Investing in mutual funds at an early age is a very good idea, in terms of planning a child’s future and is strongly encouraged.
You can explore various SIP's here.
You can explore various mutual fund options here.
Yes, minors can invest in mutual funds but it can only be done through a guardian. The guardian needs to set up an account on behalf of the minor. The minor has to be the solo holder of the account as the investment cannot be held in joint names. The guardian has the authority to take decisions regarding the investment till the child reaches the age of 18.
All income from such an investment will be clubbed with that of the guardian's income and will be taxable in the hands of the guardian.