Did you know that 90% of brain development happens at an early age? You must be wondering what it has to do with a Demat account. Well, your children are more receptive to new learning in the initial years. So, the earlier you start teaching them about investments and fiscal prudence, the better off they will be financially. As a parent, you want the best for your child’s future, and financial planning is crucial.
Investing early and in the right financial products can help secure your child’s financial future. One such investment option that you can consider is a minor demat account. Let’s explore what a minor demat account is and why it is a smart choice for your child’s financial future.
What is a Minor Demat Account?
A minor demat account is a type of demat account that is opened in the name of a minor with a parent or guardian as the primary account holder. The minor can only be the nominee until they reach 18, after which they can become the primary account holder. It is a great way to indulge your children in the world of investing. However, before opening a minor Demat account, learning about the features and types of accounts is vital. It will help you make the best choice for your child’s future.
Features of a Minor Demat Account
Now that we know what a minor Demat account is, let’s dive into its features.
- Joint Account
The first and foremost important feature of a minor account is that it’s a joint account. A minor demat account is a joint account between the parent or guardian and the minor. Typically, the child’s father or mother holds the joint account rights.
- Easy to Open
Opening a minor demat account is a simple and hassle-free process. You must submit the required documents, including the minor’s birth certificate and the parent’s/ guardian’s identity and address proof.
- Limited Trading Facility
A minor demat account comes with limited trading facilities. The minor can only invest in securities and cannot carry out any transactions without the consent of the parent/ guardian.
- Taxes
A minor is exempt from taxation, but the income earned from the investments is taxable to the parent or guardian.
Types of Investments in a Minor Demat Account
Now that we know the features of a minor Demat account, let’s learn about the types of investments one can make.
- Equity Shares
A minor demat account allows investing in equity shares of companies listed on the stock exchanges.
- Mutual Funds
A minor demat account also allows investing in mutual funds, which is a popular investment option for children’s future planning.
- Bonds
A minor demat account also allows investing in government and corporate bonds, as it is considered safe.
Minor Demat Account Coverage
A minor demat account is an excellent way to secure your child’s financial future. Investing through a minor demat account can help you build a corpus for your child’s education, marriage, or any other financial goal. It can be an excellent learning opportunity for your child and help them understand the basics of investing and fiscal prudence.
Final words
A minor demat account can serve as a learning opportunity for your child to understand the basics of investing and money management. However, before opening a minor account, learning about the demat account charges is crucial.
