How to choose the right Mutual Fund for child?

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Child Mutual Fund Plans are the best way to invest for your child’s future. Mutual Fund for Child can help you to make your child’s future life safe and secure. You can choose any child plan in mutual fund to make your child’s every dream true. A best Child mutual fund plan will help you to grow your child’s future. A good Child Mutual Fund Plan will help you to pay for your child’s education, marriage, medical expenses anything you want.

A child can invest in a mutual fund for child but he or she only can invest through his or her legal guardian, only that legal guardian can handle that child mutual fund plan until the child is 18 years old. After this age all the existing investment (SIP, STP, and SWP) will be handed over to the child and that legal guardian cannot operate that child plan in mutual fund anymore.

You also can save income tax through a child plan in mutual fund, as transferring money from parent to child and vice versa is free of tax, there is no gift tax is applicable, though saving tax on your child’s name is not right, you can invest in mutual fund for child to save tax.

How to choose the right mutual fund for child?

  • First, you have to decide for what reason you are investing in a Child Mutual Fund plan, if it is your child’s college, marriage, travel, medical or living expenses, because every investment should have a goal.
  • Then you have to calculate the time, if your child is five years old you have lots of time but when your child is 20 years old you don’t have much time so you have to invest in a different mutual fund.
  • You have to build your portfolio properly, it must be diversified you should have equity, debt, liquid plans properly in your portfolio; also you can invest in other than mutual funds.
  • You must choose a fund and an AMC which has long track records, try to avoid funds which do not has long track records.
  • You must find a child mutual fund plan which has a low expense ratio, try to avoid fund with high expense ratios.
  • Choose the best child mutual fund, a child mutual fund portfolio should be diversified in every way so you can earn money from a different type of securities, so if one type of security fails others will cover up for it.
  • Must choose a mutual fund which is giving a constant return, check the performance of at least ten years of that fund, not only check that if that fund provides a high return or not also check if that fund has provided constant return if that is not don’t go for that fund.
  • You can start with lump sum or SIP both way, but it is advisable to start with SIP so you will get the benefit of rupee cost averaging.

Top five Child Mutual Fund Plan

  • UTI Children’s Career Plan
  • TATA Young Citizens Fund
  • ICICI Prudential Child Care
  • HDFC Children’s Gift Fund
  • Franklin’s Children’s Asset Plan

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