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Childrens Mutual Funds
Wealth creation through compounding returns- Easy liquidity and Accessibility
- Spread risk through diversification
What are
Children’s mutual funds?
A children’s mutual fund is a solution-oriented fund which aims to accumulate a corpus for your child’s future. It has a lock-in period of 5 years or till the child attains majority, whichever is earlier.
Advantages of Children’s Mutual Funds
Long-Term Growth
Stay invested in equity mutual funds for a long term and grow your savings as volatility tends to smoothed out in long term.
Diversification
Choose equity securities across different market caps and sectors and invest in a diversified portfolio to enhance the return potential.
Tax Saving
Save tax on investment with Equity Linked Saving Schemes. Claim a deduction of up to Rs.1.5 lakhs under Section 80C.
Wealth Creation
Create optimal funds for your financial goals with the returns offered by Equity Funds and achieve financial independence.
ABCD - One app to build a diversified investment portfolio
Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.
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A choice of different types of mutual fund schemes -
Online investments with a fully integrated digital platform
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Facility to switch, redeem and invest more from a single platform
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Table of Contents
What are Children’s Funds?
Children’s funds are solution-oriented mutual fund schemes with the objective of creating a fund for your child’s future needs. These funds have a lock-in period of 5 years or till your child becomes an adult.
What are the features of Children’s Funds?
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Lock-in of 5 years or till child’s majority, whichever is earlier
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SIP or lump sum investment
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Asset allocation in equity and debt securities
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Long-term wealth creation
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Open-ended schemes with professional fund management
What should you know before investing in Children’s Funds?
- There’s a lock-in period which restricts liquidity in the initial investment years
- You can choose from hybrid or equity-oriented funds based on your risk profile
- If you invest in equity-oriented funds, invest with a long-term view to ride out short-term volatility.
- Hybrid funds add the stability of debt and lower volatility risks
- The returns depend on the underlying assets and benchmark index
Who should invest in Children’s Funds?
Parents looking for a dedicated investment avenue for their child
Investors who have a long-term investment horizon
Parents who want market-linked returns on their investments
What is the tax implication of Children’s Funds?
Equity-oriented funds
• Returns up to Rs.1 lakh are tax-free
• Returns exceeding Rs.1 lakh are taxed at 10%
Debt-oriented funds
• Returns earned are taxed at income tax slab rates
What is the tax implication of Children’s Funds?
Growth option
• Accumulate the returns over the investment tenure for compounding benefit
Dividend option
• Get regular dividends from the returns earned for a regular income
Invest and secure with ULIPs
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Market-linked returns
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Flexibility: withdraw, switch, top up
Secure retirement with Life Insurance
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Secure regular pensions
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Save on taxes
FAQs On Children’s Funds
Children’s Funds or children's gift funds are investment schemes in mutual funds are designed to provide financial benefits for your children, catering to needs like covering higher educational expenses and marriage expenses. These funds aim for long-term capital appreciation and belong to the category of solution-oriented mutual funds.
Child gift mutual funds encourage individuals to invest funds for long-term growth, providing returns that can significantly benefit their children in the future.
These plans empower children to pursue their aspirations without compromising them due to financial constraints.
Opting for a child mutual fund plan instills discipline, dissuading investors from hasty redemptions and encouraging commitment over a substantial duration.
These plans facilitate the allocation of funds to specific goals, ensuring a well-defined investment portfolio with clear segments for different purposes.
A children's fund allows disciplined investing with its lock-in period and helps you create an earmarked savings corpus for your child’s future needs. Plus, the market-linked returns factor in inflation can give you real returns in the long term. If you choose equity-oriented schemes, you can also earn good returns.
Solution-oriented mutual funds were introduced as a distinct category by SEBI. Two main solution oriented mutual fund categories are children and retirement funds.
No, the lock-in period for these mutual funds is predetermined according to SEBI regulations. Children's mutual funds maintain a fixed lock-in period of 5 years or until the child attains the age of majority, whichever comes first.
Other asset class funds
Debt Funds
Invest in debt securities for low risks and stable returns.
ETF Funds
Invest in funds listed and traded on the stock exchange
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Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
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Hybrid Funds
Get a mix of equity, debt and other asset classes for a diversified portfolio
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Index Fund
Passively-managed mutual funds tracking a particular index
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