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A children’s mutual fund is a solution-oriented fund which aims to accumulate a corpus for your child’s future. It has a lock-in period of 5 years or till the child attains majority, whichever is earlier.
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Children’s funds are solution-oriented mutual fund schemes with the objective of creating a fund for your child’s future needs. These funds have a lock-in period of 5 years or till your child becomes an adult.
Lock-in of 5 years or till child’s majority, whichever is earlier
SIP or lump sum investment
Asset allocation in equity and debt securities
Long-term wealth creation
Open-ended schemes with professional fund management
Parents looking for a dedicated investment avenue for their child
Investors who have a long-term investment horizon
Parents who want market-linked returns on their investments
• Returns up to Rs.1 lakh are tax-free
• Returns exceeding Rs.1 lakh are taxed at 10%
• Returns earned are taxed at income tax slab rates
• Accumulate the returns over the investment tenure for compounding benefit
• Get regular dividends from the returns earned for a regular income
Children’s Funds or children's gift funds are investment schemes in mutual funds are designed to provide financial benefits for your children, catering to needs like covering higher educational expenses and marriage expenses. These funds aim for long-term capital appreciation and belong to the category of solution-oriented mutual funds.
Child gift mutual funds encourage individuals to invest funds for long-term growth, providing returns that can significantly benefit their children in the future.
These plans empower children to pursue their aspirations without compromising them due to financial constraints.
Opting for a child mutual fund plan instills discipline, dissuading investors from hasty redemptions and encouraging commitment over a substantial duration.
These plans facilitate the allocation of funds to specific goals, ensuring a well-defined investment portfolio with clear segments for different purposes.
A children's fund allows disciplined investing with its lock-in period and helps you create an earmarked savings corpus for your child’s future needs. Plus, the market-linked returns factor in inflation can give you real returns in the long term. If you choose equity-oriented schemes, you can also earn good returns.
Solution-oriented mutual funds were introduced as a distinct category by SEBI. Two main solution oriented mutual fund categories are children and retirement funds.
No, the lock-in period for these mutual funds is predetermined according to SEBI regulations. Children's mutual funds maintain a fixed lock-in period of 5 years or until the child attains the age of majority, whichever comes first.
A child plan and a Children’s Fund are two different things. While the former provides insurance coverage and helps in creating a corpus even in the parent’s absence, the latter helps you create a market-linked corpus for your child’s needs. Children’s Funds are targeted funds which help with disciplined investments, grow your corpus with market-linked returns and create a corpus for your child’s future. Assess your needs and then make the right choice.
To prepare for your child’s higher education, you can invest in a children’s mutual fund based on their anticipated education cost. The fund would help you invest in an earmarked fund for your child’s needs and create a good corpus with market-linked returns.
Yes, grandparents or any legal guardian can invest in children's funds for their grandchildren, providing a valuable financial gift for the child's future.
Yes, the dividends received from children’s mutual funds are subject to tax. They are taxed at your income tax slab rates.
Starting early is advisable to benefit from the power of compounding. Ideally, parents can begin investing as soon as the child is born or shortly thereafter.