Children's Day: All your questions answered on investing for a minor
As we observe Children’s Day today, many parents continue to be concerned about their children’s financials. Ensuring financial security is a paramount objective for parents. They aim to guarantee that their children possess the necessary financial means to fulfill basic requirements like food, shelter, clothing, and healthcare, while also supporting their pursuit of goals and aspirations.
Investing for a minor is not easy, especially, when investors are not sure of where and how to commence the investment journey on behalf of their wards. Many people inquire about putting money on their children’s behalf to ensure that lack of money does not impede their life goals.
A minor is eligible to possess a Demat account, but its operation must be overseen by a guardian until the minor attains the age of majority. This restriction arises from the fact that minors lack the legal capacity to engage in binding contracts, which includes the processes necessary for opening and managing brokerage accounts.
To establish a Demat account for a minor, the guardian is required to furnish the broker with the minor's birth certificate and proof of guardianship. Furthermore, the guardian must sign all essential documents on behalf of the minor.
Following the successful setup of the Demat account, the guardian can utilise it for the buying and selling of securities on behalf of the minor. Additionally, the Demat account can be employed to receive dividends and other payments on behalf of the minor.
Upon reaching the age of majority, the minor gains control of their Demat account. Nevertheless, they may opt to retain the guardian as the account operator, particularly if they are new to the realm of investing.
The essential documents needed for
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