Even a 28-day-old infant can invest in the stock market; an account can be opened in just 5 steps..

Did you know that a child can start investing in the stock market just days after birth? It might sound a bit unusual, but it is possible. Zerodha founder Nithin Kamath revealed on the social media platform X that the youngest investor on their platform is just 28 days old. The child's parents opened a 'Minor Account' in the child's name and made the first investment within about a week.

This also indicates that many parents are now starting to invest for their child's future at a very early age. However, a minor account does not mean the child can buy or sell shares themselves; the account opened in the child's name is operated by the parents or a legal guardian. If you also wish to start investing by opening a Demat account in your child's name, it is important to understand the process.

What is a Minor Demat Account?

A minor account is opened in the child's name but is managed by the guardian. This means investment-related decisions are made by the parents or legal guardian; the child cannot trade personally. Such accounts are typically used to hold long-term investments in the child's name. They can hold shares, mutual fund units, or shares acquired through IPOs. However, activities like intraday trading and trading in Futures & Options are not permitted.

How to open a Demat account in a child's name?
First, it is essential for the parent or guardian to have an existing account with the relevant broker. Only then can the process of opening a minor account be initiated.
In the case of Zerodha, guardians can apply for a minor account directly through their own existing accounts.

This involves providing the child's details, such as name, date of birth, and PAN information. Subsequently, the child's identity and other documents undergo verification.
Details regarding the child's bank account must also be provided during the application process. The account is opened after submitting the necessary documents and completing the KYC process.

What documents are required?

To open a minor account, identity-related details such as the child's PAN and Aadhaar are essential. Additionally, a birth certificate or school-related document may be requested. Documents regarding the guardian's PAN and KYC are also mandatory. Proof of the child's bank account, such as a cancelled cheque or passbook, may also need to be provided. If the account is being operated by a legal guardian rather than the parents, additional documentation related to that guardianship may be required.

What happens after the child turns 18?

Once the child turns 18, the process of converting the account into a regular Demat account must be completed. This may require submitting fresh KYC details and necessary documents. It is important to understand the rules regarding taxation, banking, and KYC when investing in a child's name. While the objective of a minor account may be long-term investment for the child, investment decisions should always be made with risk factors and financial goals in mind.

Disclaimer: This content has been sourced and edited from News18 Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.