Akash Jha
Mutual funds are highly valued by investors due to their risk control and diversification. The beautiful thing about mutual funds is that they can be used by anyone with money to invest. Everyone can invest in a mutual fund for their child; you do not need to be affluent or have a large net worth to do so.
Mutual funds are an excellent way to save money for your child’s future. When you put money into a mutual fund for a child, interest is earned and deposited into your account on a regular basis. This interest is used by the fund’s management to purchase securities such as bonds, equities, or other investment vehicles that create long-term returns. These earnings are distributed to investors in the form of dividends, which they receive on a regular basis until they withdraw their capital from the fund manager.
The Children’s Gift Funds allow you to set money aside for your child’s future. Users can open a joint bank account with more than one child or contribute to an individual plan. When they reach the age of 18, each child will receive a piece of the money. You can begin investing as soon as you have obtained the relevant papers and established your account. You can change your investment preferences after you open your account at any time.
When you contribute to the Children’s Gift Passive Investment, you are giving your kid more than simply money; you are giving them a head start in the future. With every rupee you provide, children will get access to a diverse range of assets, allowing them to lay a solid basis for future success.
Things to Take Into Consideration Before Investing in Mutual Funds for Children
When buying mutual funds for children, you should think about the following:
- Investment Horizon: The first thing that must be done is to create a strategy for investing. The term “investment horizon” describes the length of time you plan to keep money in the fund. This time frame could be as long as fifteen years.
- Documentation: Before you begin investing in mutual funds, ensure that you have all of the necessary paperwork. This includes identification, address, and age proofs, as well as confirmation of residency. Your bank account number, which is typically requested when investing online, must also be provided.
- Returns: When choosing a mutual fund, it is critical to consider its rate of return. Indicators such as historical volatility, tracking inaccuracy, and cost ratio can also be used to determine this by taking earlier performance into account.
- Risk profile: Choosing the best mutual funds for your children’s future that fits your risk profile is crucial. If you want high earnings but low volatility, pick a fund with extreme volatility but lower returns; if you’re looking for medium returns with little volatility, pick a fund with slow growth but better yields.
- Asset allocation: An investment portfolio is the sum of money that should be invested in multiple asset types, such as equities or debt funds. Equity funds should only be used when there are sufficient resources to cover an emergency, as they provide higher returns but also higher risks.
Best Mutual Funds For Children 2023
1. ICICI Prudential Child Care
The ICICI Prudential Child Care Fund – Gift Program, which was established on August 31, 2001, is a broad-aggressive mixed strategy. A mutual fund that invests in stocks and bonds. It is a long-term investment strategy that seeks income and capital growth.
2. HDFC Children’s Gift Fund
It was first released in 2001. The fund has been managed by HDFC Asset Management Company Ltd since its inception. The fund’s holdings are made up of stocks and bonds, which are considered to be relatively safe investments. The fund’s investment goal is to achieve long-term capital appreciation by investing primarily in equities and equity-related products, fixed-income securities, money market instruments, and other debt instruments of enterprises domiciled or operating outside of India.
3. Tata Young Citizens Fund
The fund was founded in 1995. Tata Young Citizens Fund invests in bonds and equities of companies listed on the Indian stock exchange. Furthermore, it invests in government securities, corporate debt, money market instruments, debentures, and so on.
4) Axis Children’s Fund
A mutual fund dedicated to improving children’s lives. Over the past two decades, the AXIS Children’s Gift Initiative has had consistent success. AXA Investment Managers, one of India’s largest asset managers, is in charge of its management. The fund has returned 7.13% in the last year, 12.75% in the last three years, and 10.33% in the last five years. It has made a profit of 10.07% since its inception.
Wrapping Up
Mutual fund plans for children are developed to provide a secure and safe manner of investing in the next generation’s education and health. The funds aim to generate steady income by investing in debt and stock market assets.
Investing in a mutual fund for your child’s education is just the beginning. Investing in top-rated mutual fund plans for your child can boost your return. But, in the end, supplying your child with the greatest mutual funds plan for children’s future isn’t enough; you also need to consider their future and equip them with options so they can choose their life path.
