Children's Mutual Funds

Children's mutual funds are structured with a long-term investment objective in mind. The goal is usually to provide steady growth over the years to help meet the child's future financial needs, such as education expenses or a down payment on a home.

The mutual fund manager selects investments according to the fund's investment strategy, which may include a mix of stocks, bonds, and other assets. The allocation may be designed to balance risk and return potential over the long term.

Parents or guardians typically set up the mutual fund account in the child's name, with themselves as the custodian until the child reaches the age of majority (usually 18 or 21, depending on the jurisdiction). This ensures that the investments are legally owned by the child.

Parents or guardians can make regular contributions to the fund on behalf of the child. These contributions can be made monthly, quarterly, or annually, depending on the family's financial situation and investment goals.

Like all investment vehicles, children's mutual funds are subject to market risk. Fluctuations in the financial markets can impact the value of the fund's holdings, potentially leading to losses, especially in the short term. While a long investment horizon can help mitigate market risk, investors should be prepared for periods of volatility and downturns in the market.

Children's mutual funds are typically structured as diversified investment portfolios, designed to meet the needs of a broad range of investors. As a result, they may not offer the level of customization needed to address specific investment objectives, risk tolerances, or preferences of individual families. Investors seeking tailored investment strategies may prefer alternative investment vehicles, such as separately managed accounts or individual securities.

Children's mutual funds may impose restrictions on liquidity, particularly if they have lock-up periods or redemption fees for early withdrawals. This lack of liquidity could pose challenges if the investor needs access to funds unexpectedly or if financial circumstances change. Investors should consider their liquidity needs and evaluate the fund's redemption policies before investing.

Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).

Once your Free investment account is ready, you can either search for a Children's Mutual Funds or go to the mutual fund section and tap on Children's Mutual Funds.

Choose a Children's Mutual Funds by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.

You can choose to set up SIP in Children's Mutual Funds or even invest as lumpSum. Once you are on the individual Children's Funds page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan. 

Choose the amount that you want to invest as SIP or LumpSum.

Set up payments. If you choose to set up SIP in Children's Mutual Funds, you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.