in-your-childs-name-mfs-sukanya-samriddhi-and-ppf-make-the-cut-5270291.html">Investing for our children is always a financial goal for all parents. We want the best of education for them, perhaps save a bit for their marriage or set aside a small corpus to get them going when they grow up and enter the work life. The sooner, you start, the better it is for them. But where should you start?

 

In this Simply Save podcast, Parul Maheshwari, a Mumbai-based certified financial planner joins us to explain how to use the mutual funds (MF) route to save money for your child. Broadly speaking, Maheshwari says that there are two ways: You can either invest in your child’s own name. Or you could invest in your own name, like you do for other investments in general but earmark the folios in your records that they are in your child’s name, to avoid confusion.

 

But Maheshwari says it’s always best to invest in your child’s name (as the primary holder), so that these folios are easily recognisable. “In times of emergency, when you need funds, you might just end up selling those mutual fuds that you had set aside for your child. Besides record keeping to that extent is always cumbersome. If your investments are in your child’s name, you would just naturally be hesitant to touch them,” she says. 

 

Ensure you have a savings bank account in your child’s name. As per mutual fund guidelines, money can be invested in your child’s name, only if it comes from a bank account where you child is the primary holder. No joint holder or nominee will be allowed in a folio held by the minor. The guardian in the folio should be either parent (father or mother) or a court appointed legal guardian.

 

You can start a systematic investment plan (SIP) in your child’s name. Maheshwari recommends open-ended diversified funds, instead of children-focussed MF schemes. 

 

Do listen to this special podcast and also what to do once your child turns 18.