Money should not be a barrier to achieving children’s goal, like Education, business, marriage etc.
Do you wish the same for their child? If YES, this article is for you
✅ Investing from a minor’s account is higly beneficial – especially for long-term wealth creation, tax planning, and disciplined goal-based saving. Here’s a complete example of how and why it’s beneficial – with real example:
1. Power of long term compounding:
The early you start, the longer the money grows. A minor account give 15-20+ years of compounding before the funds are even accessed
Example:
- Rs. 5000/month SIP from the age form 1 to 18
- At 12 % CAGR -> 35.58 Lac
- And if it continue till the age of 27, it might be become more then 1CR
2. Dedicated Saving for Child’s Future:
- Keeps funds separate and focused on specific goals (e.g., education, marriage).
- Avoids accidental withdrawals or misuse — parent acts as guardian, not owner.
3. Tax Efficiency:
- Income from investments made with gifted money (e.g., by grandparents) is not clubbed with the parent’s income — it can be completely tax-free for the minor.
- For regular cases, income is clubbed with the higher-earning parent, but:
- One-time ₹1,500 tax exemption per child per year
- No separate tax filing for the minor until adulthood
🧾 Benefit: Can legally create a tax-shielded investment ( Please consult with your advisor before investment)
4. Emotional and Educational Benefit:
- Children grow up seeing the value of investment.
- Great way to introduce financial literacy and money discipline
5. Legal and Regulatory Advantage:
- Funds are in the child’s name, but guardian controls it.
- On turning 18, the child takes over with full legal control — after KYC update
6. Better Planning for Milestone Goals:
You can match different investment plans to:
- Higher education (~age 18–21)
- Study abroad/Professional (~age 22–25)
- Marriage (~25–30)
This aligns investment duration with life stages — giving optimal returns and minimizing risk near goal time.
Quick Summary
| Benefit | How It Helps |
| Early Compounding | Massive corpus build-up over 15–20 years |
| Tax Efficiency | Income from gifts may not be clubbed → lower tax |
| Controlled Growth | Parent manages until child is 18 |
| Goal Alignment | Separate funds for college/marriage |
| Legal Simplicity | No joint ownership confusion; clear minor-beneficiary format |