How to choose the right mutual fund for your child?

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Most of the financial plans have child-related goals in them.  It is not always easy to choose the right Mutual Fund for child. There are so many AMCs which offer Mutual Funds for child education.  The importance of education for children can’t be taken for granted. Child education Mutual Funds can be so helpful in these cases. Systematic Investment plans are one of the best ways to invest in Mutual Fund for Child.

Child Investment plans in Mutual Funds

Most of the cases we see that parents invest in mutual funds for child education but child investment plans in mutual fund are also available but they only can invest through their guardian. The guardian can be that child’s real parent or appointed a legal guardian by the court through the child will go for mutual fund investment. The guardian can operate the mutual fund investments until the child is in his or her 18, this child investment plans in mutual funds will help him or her to make a financial habit which will be helpful for his or her life.  The SIP, STP or SWP will whatever be going on can be only halted by the child after the age by submitting appropriate documents. Child investment plans in mutual fund are also Mutual Fund for child invested by parents. Mutual Funds for child Education in India are going popular every day because of one this benefit.

Is mutual fund for child taxable?

The most amazing thing about Child investment plans in Mutual Fund is that is not taxable, which means if you start a mutual fund for child of yours, you can save income tax as there is no gift tax applicable. However, the income earned by a child from mutual fund investments is liable to be clubbed with the parent’s income for the purpose of income tax.

Guidelines parents should follow before they invest any child education mutual fund

Currently, the cost of education is getting every day higher and higher which became the biggest nightmare for the parents. Parents at least need 15 to 30 lakh and it is getting like 20% per annum. Considering the current circumstances, parents should invest in a mutual fund for child education in India which may be helpful to their increasing expenses. Equities are one of the best options to create that amount of money. At the time seeing the market volatility investors should invest through the mutual fund for child education. And investing through mutual funds for child education’s one of the best sights is the mutual fund is managed by professionals and they are diversified through sectors and stocks. Here are some guidelines parents should follow before investing in mutual fund for child education.

  • Go open a minor account for your child education mutual fund.
  • Invest through SIP (Systematic Investment Plan) in mutual fund for child education.
  • If your child’s college enrollment is less than five years away from your mutual fund for child education’s portfolio should consists of debt and balanced funds.
  • And if your child’s college enrollment is more than five years away your mutual fund for child education’s portfolio should consists of equity mutual funds and one balanced mutual fund.
  • Review your Mutual Funds for child education portfolio in a yearly basis if one of them is underperforming for a year you don’t have to be panic but if it is underperforming more than two years you should stop that SIP.
  • If your child’s college education is two years away your entire money should be moved from equity to debt funds.
  • Last but not least your mutual fund for child education’s SIP amount should be increased every year.

Funds which can create an ideal portfolio for your child education mutual fund if she has more than 10 years to start college education.

  • Birla Sun Life Frontline Equity Fund (G)
  • UTI-Opportunities Fund (G)
  • IDFC Premier Equity Fund (G)
  • SBI Emerging Businesses Fund (G)
  • ICICI Prudential Value Discovery Fund (G)
  • HDFC Mid-Cap Opportunities Fund (G)          
  • Reliance Small Cap Fund (G)
  • Reliance Banking Fund – (G)
  • HDFC Prudence Fund – (G)

Best Child investment plans in Mutual Fund

  • HDFC Children’s Gift Fund-Investment Plan  (Equity Oriented)
  • HDFC Children’s Gift Fund-Savings Plan (Debt Oriented)
  • ICICI Prudential Child Care Plan-Gift Plan (Equity Oriented)
  • ICICI Prudential Child Care Plan-Study Plan (Debt Oriented)

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Minimum Loan amount is Rs.15,000 !

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