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
- Interest earned is tax exempted.
- Section 80C upto 1.5000 claims for invsted amount every year
- 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.
- 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).