Steps to open a mutual fund account in your kids name.

22 Nov

1. Open a “Minor-Through-Guardian” S/B account. It is relatively easy process if you talk to your bank. You would get the cheque book in the name of your kid with your name as a guardian. You need not carry kid along with you. You just need his/her birth certificate.

You need not create “Minor-Through-Guardian” account if you can assure that you wont touch the kids money for day to day expenses. In any case having a separate account helps monitoring.

2. You can invest in mutual funds SIP schemes.
I personally prefer valueresearch ratings and chose mid-cap/multicap funds as my time horizon is long. If you want to take less risk you can choose “largecap” or balanced funds.

2a. You(Guardian) has to complete the KYC process.
Print http://www.cvlindia.com/include/pdf/KYCIndividual.pdf
Fill and submit(personal visit needed, you need not carry kid) it along with mutual fund form below @ AMC office(I invested in Franklin Templeton and hence gave it in Alwarpet).

I invested in “Templeton India Equity Income”(multicap) in my kids name my other favorite is “Franklin India Prima Plus”(midcap)). In large cap I prefer “Franklin India Bluechip”. You can shop for right fund @

http://www.valueresearchonline.com/funds/fundrankengine.asp

You can use the below link to find the fund by its rank.

http://www.valueresearchonline.com/funds/fund_selector_quick.asp

2b.Download the mutual fund forms http://www.franklintempletonindia.com/pdf/forms/gen_ae_en_09_09.pdf
And print and fill page 2, 3 and 6.

Choose other fund house forms as needed.

Note1: MAKE SURE YOU PUT BROKER CODE as “DIRECT” as it would fetch you slight ~1% more as fund house saves on “Broker commission”.
Note2: Choose “Growth plan” instead of “Dividend” plan as it would save 5% on dividends(Dividend Distribution tax of 5%) once DTC comes in to effect(Expected from 2013-2014 FY).

Carry the the forms along with KYC application and visit Franklin templeton or any other AMC office.(If you have already completed the KYC you need not visit in person, check your KYC status by giving your PAN number @ https://www.cvlkra.com/kycpaninquiry.aspx), You need to carry the photo copy of kid’s birth certificate.

More importantly signup with valueresearchonline.com to track your investments.

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3 Responses to “Steps to open a mutual fund account in your kids name.”

  1. Alexander Thomas November 30, 2012 at 12:15 pm #

    Open or Close funds, which one should I prefer…?

    • kameshj November 30, 2012 at 7:44 pm #

      Close funds are very rare. The difference between close and open ended fund is,

      In open ended funds units are created/destroyed everyday based on inflow/outflow.

      In closed ended funds units are created only during nfo so you can not buy anytime later so no SIP.

      I think closed end funds exit load is high for first few years.
      I may not prefer closed ended fund.

      • Alexander Thomas December 3, 2012 at 5:25 am #

        Thanks

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