You can make many investments in your name to make your child’s future. It also includes the stock market and mutual funds. But it is not that by simply writing the name of the child in the form, the legal process of investment will be considered valid. For that some rules have been made which will have to be followed. In stocks and mutual funds, the account holder’s name will contain the child’s name, but the paperwork will be done through his father.
It is a sure thing that a child does not have enough capacity to invest in stocks or mutual funds. For this his ‘guardian’ will have to come forward. All investments in the name of the child are made under the supervision of the guardian or guardian.
In most of the cases, the parents are the parents of the child. In some other cases, the court can also decide on the guardian of the child. Birth certificate will be required to prove the age of the child in the investment. What is the relationship between the child and the parent, any document will also have to be given to prove it. Before starting investment in the name of the child, the guardian will have to submit his bank details, PAN and KYC documents.
This account will be opened first
Investment will start in the name of the child but his/her guardian will have to transfer the money from his/her bank account. However, the complete ownership of the investment will be with the child. The account which will be opened for investment in the name of the child will not be a joint account nor will there be any nominee in that account. In case of stocks or mutual funds, only the parent will operate the demat, trading or bank account of the child. For this, the child and his guardian will have to give their PAN, only then investment in stocks or mutual funds will start.
How do kids invest in the stock market?
There is a minor trading account for this. This account is started by the guardian in the name of the child, through which the investment in the stock market starts. The minor can invest money in equity delivery trade in the name of the child only through the trading account. Children cannot invest in equity intraday, equity derivatives trading and currency derivatives. When a minor child becomes an adult, his/her trading account can be closed. Now a new trading account is opened in the name of that adult child and the previous account is shifted to it. There are certain conditions which have to be fulfilled in order to open a new trading or demat account. A 3-in-1 account i.e. Bank, Demat and Trading account can be opened simultaneously in the name of an adult child.
What do I need to do to invest in Mutual Funds?
Minor children can invest in mutual funds with the help of their guardian. The minimum limit for investing in mutual funds is 18 years. There is no maximum age limit. In such a situation, if you want to invest in mutual funds in the name of a minor child, then some important rules have to be followed. For investment, you can give proof of worth certificate, mark sheet, different boards of states, ICSE, CBSE leaving certificate in the name of the child, passport in the name of the child and proof of date of birth. In the future, if the child does not live with his guardian or the guardian dies, then some separate documents will have to be submitted for him. If a new guardian is formed, then his PAN and KYC documents will have to be given.
