SIP: What are the rules for minors? Can children under 18 years of age invest?
Mutual funds are very popular considering the features of SIP and its returns. But if someone is under 18 years of age and wants to invest in SIP, can he do so? Let us tell you what are the rules for minors in SIP.
Mutual funds are considered a very good scheme in terms of investment. Over time, this scheme has become very popular. Despite being market-linked, this scheme gives good returns in the long term. Experts consider its average return to be 12 percent. Apart from this, flexibility is available in mutual funds. A person can start investing in this scheme with Rs 500 and can increase the amount to be invested over time and if there is any kind of financial problem, then it can also be paused for some time in between.
Given all these features and better returns, this scheme is very much liked. But if someone is below 18 years of age and wants to invest in SIP, can he do so? Let us tell you what are the rules regarding minors in SIP.
These 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. But for minors below 18 years of age, investment can be made by their parents or legal guardian. But in such cases the child will be the sole holder, joint holders 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 evidence 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, which contains the information about the age of the minor and his relationship with the guardian. 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 the SIP. Before the minor turns 18, a notice will be sent to the unit holder at his registered correspondence address. This notice will inform the minor about the need to apply along with the prescribed documents to change his status in the investment from 'Minor' to 'Major'.
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