Mutual Funds SIP has become a popular investment option among people. With the kind of returns it has given in the past years, investors have the hope that they can easily secure their future through SIP. This is the reason why people are investing more and more in SIP these days. Through SIP, you can deposit a good amount of money in the long term and use it for children's education, marriage, or household needs. But if you want to start SIP in the name of your minor child, then you should first understand some rules.
Know what are the rules for minors.
There is no limit on the age of investment and the amount of investment in SIP. The sooner you invest in it, the sooner you will be able to get better benefits. The child's parents or legal guardians can invest in the name of a minor below the age of 18 years. But in such cases, the child will be the sole holder and joint holder will not be allowed.
These documents will be required.
While investing in the case of a minor, you have to provide proof of the child's age and your relationship with the child. For this, as proof of the minor's date of birth and the relationship of the guardian (natural or legal guardian), the child's birth certificate, passport, or any such valid document will have to be given, in which the information about the minor's age and his relationship with the guardian is recorded. At the same time, the guardian must follow the regulations related to Know Your Customer. Transactions can be done directly from the child's account, but if it has to be done through the parent's bank account, then you will also have to submit a third-party declaration form.
On turning 18
All these rules will be valid only till the child is a minor. As soon as the child turns 18, the parents will have to stop SIP. Before the minor turns 18, a notice will be sent to the unit holder at his/her registered correspondence address informing the minor about the need to apply along with the prescribed documents to change his/her investment status from 'minor' to 'major'.
