It’s very important to know that like life insurance companies, some mutual funds also provide children’s plans. The main objective of mutual funds having these plans is to help the investors save for their children’s future needs such as higher education.
In case you a looking to consider investing in mutual fund children’s plans, you need to consider the following four key features of mutual fund children’s plans before starting:
Children’s plans come in multiple variants in terms of asset allocation
Children’s plans from mutual funds come in multiple variants of equity and debt-oriented funds in addition to hybrid funds, which invest in equity as well as debt.
Certain children’s plans come with a lock-in period
Some children’s plans offered by mutual funds do come with a lock-in period. That helps you largely in maintaining an investment discipline in terms of your child’s financial goals. Thus, this will help you stay invested for your children’s future needs.
Higher exit load could be a consideration
Most children’s plans offered by mutual funds have a higher exit load. The main reason behind this is to ensure that the parents stay invested in the plans for achieving their long-term goal for their children. The exit load ranges from 1-5% depending on the investment tenure.
Entry age limit
Some mutual fund plans for children can come with an age barrier for mutual fund entry for children. This means that you cannot invest in the scheme after your children have crossed that age limit threshold.
Therefore, choose your mutual fund option for your child wisely and start planning for your child’s future now. Mutual fund investments are one of the best ways to fight inflation and get stronger returns in the long run. Here are the two funds that we feel can be the best option for you to plan your children’s future:
|Scheme Name||NAV as on 20th November 2017||Asset Under Management (in Cr)||Minimum Investment||Exit Load|
|SBI Magnum Children’s Benefit Plan
|53.5||40.32||5000||Exit Load 3% if Redeemed within 1yr, 2% if redeemed within 2 yrs and 1% if redeemed within 3 yrs.|
|ICICI Prudential Child Care Plan – Study Plan
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.