Mutual Funds: How to invest in mutual funds in the name of children, know the complete process

Photo: FREEPIK How to invest in mutual funds in the name of children?

You can easily invest in mutual funds in the names of children also. This will help you in meeting big expenses like children’s education and marriage. The special thing about mutual funds is that through them you can easily invest in the market without spending any time. At the same time, one advantage of investing in mutual funds in the name of children is that due to more time, you get more benefit from compounding and this also helps you in diversifying your portfolio.

Process to invest in mutual funds in the name of children

Investing in mutual funds in the name of children can be done easily through offline and online mode. While opening an account in a mutual fund, you require birth certificate of children, proof of being a parent or guardian and address certificate. After this, after KYC of the child and guardian, you can easily open the account.

After this you have to select the mutual fund scheme. Always keep in mind your risk profile, time period and type of fund while making the selection. Now you can invest through capital.

Parents have to pay child mutual fund tax

According to Section 64 of Income Tax, if the capital gain is made from the sale of mutual fund after the child completes 18 years of age, then it will be added to the income of the parent or guardian and as the child turns 18 years of age, So he will have to pay tax on the income from mutual funds.

Let us tell you, if you are investing in the name of children, then the money on sale of mutual funds will be credited only to the child’s bank account. For this reason, it is important to have a child bank account at the time of investment.

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