how to invest in mutual fund for child benefits plans

 

Categoy Solution oriented mutual funds- child education marriage

Lockin Period

minimum lock-in period of 5 years, whereas they can be extended until the child becomes an adul 18+ yearst.

 

How much to invest for child education?

• Lets say child is 8 years old, Medicine course cost today in 20 lakhs.
• lets take infaltion 10% per year, we need to accumulate 50 lakhs for 10 years when child ready to go college 18 years.
• assume 10% return every year then 24000 Per month SIP through mutual funds invest.

Note: Returns & inflation may vary dependng on the market conditions. as seen below 12% return average in mf child plans.

Prenalty for premature withdrawals

Fund houses usually charge upwards of 4% penalty

Taxability

1. Interest earned  is tax exempted.
2. Section 80C upto 1.5000 claims for invsted amount every year
3. annual exemption of Rs. 1,500 per child under Section 10 (32) of the Income Tax Act, 1961 if the interest income exceeds Rs. 6,500 annually.
4. Mutual funds for children which are marketed as a gift are also tax exempted

Fund Name	fund Size in cr	3 years returns	5 years return
SBI Magnum Children’s Benefit Fund – IP – Dir Growth	1,930	32%	–
ICICI Pru Child Care Fund-Gift Plan – Direct	1,257	21.3%	16.8%
HDFC Children’s Gift Fund – Direct Growth	8,864	19.3%	18.4%
Tata Young Citizens Fund – Direct	339	17.6%	18.3%

 

other alternative nvestements

Children’s Mutual Funds in comparison to popular saving schemes like FD, PPF, Sukanya Samriddhi yojana, etc.

 

How can I invest in a mutual fund in my child’s name

• Investments locked until child age 18 years tnrasfered to her name.
• Account maybe frozen if no transcation within 1 years. unlocking  some minor issue.

 

Certifcates reqired

Child date birth certifcate

Aadhaar card

Child & parents / guardian relation ship certifcate (such Birth certifcate metiones as father or mother).