Know in Detail if Minors Can Invest in Mutual Funds

Can Minors Invest in Mutual Funds?

What Happens When a Minor Turns Major?

How to Change Minor Status to Major?

What Are the Necessary Documents for Changing the Status?

Frequently Asked Questions

What are the legal requirements for investing in mutual funds for minors? up-arrow

According to the Indian Trusts Act, of 1882, a minor can be a beneficiary of a trust but cannot be a trustee or an executor. Therefore, a legal guardian, such as a parent or grandparent, must open and manage the mutual fund account on behalf of the minor.

Can a minor open a Demat account to invest in mutual funds? up-arrow

No, a minor cannot open a Demat account on their own. A legal guardian has to open a Demat account on behalf of the minor.

What are the best mutual funds for minors? up-arrow

Minors can invest in any type of mutual fund, including equity, debt, and balanced funds. Furthermore, parents should opt for low-risk investments such as debt funds for minors.

What are the tax implications of investing in mutual funds for minors? up-arrow

The applicable income tax rate is based on the minor's investment and their parent’s higher income. However, if the income of the minor is below the tax-exempt limit, there will be no tax liability.