Best Mutual Funds for Children in 2023

Investing in your child's future is a crucial financial decision that can lay the foundation for their long-term financial well-being. 

Mutual funds are a popular investment option for parents looking to build wealth and meet their child's education, marriage, or other financial goals.

We will explore some of the best mutual fund plans for children in 2023, based on the recommendations from Tradingbells, a leading online investment platform. Let's dive in and discover the investment options that can help secure your child's future.

Best Mutual Funds for Children in 2023

1) HDFC Children's Gift Fund

HDFC Children's Gift Fund is a top-rated mutual fund plan specifically designed for children. This fund aims to generate long-term capital appreciation by investing in a mix of equity and debt instruments.

It offers the flexibility of investment in monthly, quarterly, or annual SIPs (Systematic Investment Plans), allowing parents to invest at their convenience. 

The fund has consistently delivered excellent returns over the years, making it an attractive choice for parents seeking wealth-creation opportunities for their children.

2) ICICI Prudential Child Care Fund

ICICI Prudential Child Care Fund is another popular mutual fund plan that focuses on investing in equity and equity-related instruments to provide growth opportunities for children's future needs. 

The fund follows a disciplined investment approach and maintains a diversified portfolio to mitigate risks. It offers both growth and dividend options, allowing investors to choose the one that aligns with their investment goals. 

With its track record of delivering competitive returns, ICICI Prudential Child Care Fund remains a reliable choice for parents.

3) Axis Children's Gift Fund

Axis Children's Gift Fund is a goal-oriented mutual fund plan that aims to accumulate wealth for children's future financial requirements. 

This fund invests in a mix of equity and debt securities, maintaining an appropriate asset allocation based on the child's age. It offers the flexibility to switch between growth and dividend options, enabling parents to align their investment strategy with their financial objectives. 

Axis Children's Gift Fund has consistently outperformed its benchmark, making it a preferred choice for long-term wealth creation.

4) UTI Children's Career Fund-Investment Plan

UTI Children's Career Fund-Investment Plan is a unique mutual fund designed to help parents save for their child's higher education expenses.

This fund primarily invests in equities and equity-related instruments to maximise returns over the long term. The fund provides a lock-in period until the child reaches the age of 18, ensuring that the investment remains dedicated to the child's educational goals. 

UTI Children's Career Fund has a solid track record of delivering competitive returns, making it an ideal choice for parents looking to secure their child's academic future.

5) SBI Magnum Children's Benefit Plan

SBI Magnum Children's Benefit Plan is a well-established mutual fund that focuses on capital appreciation and wealth creation for children. 

The fund follows a balanced investment approach, allocating assets to both equity and debt instruments to provide stability and growth. It offers the flexibility to choose between growth and dividend options based on the investor's risk appetite and investment goals. 

SBI Magnum Children's Benefit Plan has a strong performance history and has consistently provided steady returns, making it a reliable investment option for parents.

For More: Top Mutual Funds with Highest 10-year Returns

Advantages of Children's Mutual Funds
 

1) Goal-based asset allocation

Children's funds allow parents to allocate funds based on specific goals such as education, healthcare, marriage, etc. This helps in creating a well-structured investment portfolio tailored to each goal. Parents can also choose an appropriate asset allocation based on their risk tolerance and financial capacity.

2) Tax benefits

Investments made in children's plans are eligible for tax exemption under Section 80C of the Income Tax Act. 

Parents can claim a deduction of up to Rs. 1,50,000 per year. Additionally, Section 10 (32) of the Income Tax Act provides an exemption of Rs. 1,500 per child if the interest income exceeds Rs. 6,500 annually. 

Parents of children with disabilities may qualify for additional tax benefits. Indexation benefits can result in lower taxes during redemption.

3) Lock-in period

Most children's mutual funds have a lock-in period of 5 years, which can be extended until the child reaches maturity (usually 18 years). This longer lock-in period allows the funds to grow and accumulate over time, facilitating the achievement of financial goals.

4) Professional fund management

Children's mutual funds are managed by experienced professionals who have expertise in the financial market. This means that even investors with limited market knowledge can invest in these funds and benefit from the skills of the fund managers. The involvement of professionals can potentially lead to better returns on investments.

Why should you consider investing in mutual funds to secure your child’s future?

• Investing in mutual funds can be a beneficial choice for securing your child's future for several reasons. 
   
• Unlike traditional saving instruments such as bank fixed deposits, Unit Linked Insurance Plans (ULIPs), and endowment plans, mutual funds offer the potential for higher returns. 
   
• These funds allow you to build a diversified portfolio, which can help generate long-term growth.
   
• Compared to low-interest bank deposits, mutual funds have the potential to provide better returns, especially considering the impact of taxes and inflation. 
   
• Bank deposit interest is taxable based on the investor's income tax bracket, leading to reduced post-tax returns. Mutual funds offer the possibility of higher post-tax returns and have the potential to outpace inflation.

By investing in mutual funds for your child's future, you can take advantage of potentially higher returns, diversification benefits, and the ability to combat inflation. 

It's essential to research and select suitable mutual funds based on your investment goals, risk tolerance, and time horizon to ensure the best possible outcomes for securing your child's financial future.

Conclusion

Investing in mutual funds for your child's future can be a prudent financial decision. However, it is crucial to carefully analyse the available options and select funds that align with your investment goals, risk tolerance, and time horizon. 

The aforementioned mutual fund plans, including HDFC Children's Gift Fund, ICICI Prudential Child Care Fund, Axis Children's Gift Fund, UTI Children's Career Fund-Investment Plan, and SBI Magnum Children's Benefit Plan, have demonstrated consistent performance and have the potential to generate long-term wealth.

Start investing in the best mutual funds for children in 2023 and set your child on the path to financial success.

"Invest in your child's future with the belief that you are sowing the seeds of their dreams. With the right mutual funds, patience, and dedication, you can nurture those dreams into a bountiful harvest of success."

Frequently Asked Questions 

1)  Best Mutual Funds for Children in 2023.
Ans - Here are some rephrased versions of the given information:

A) The Axis Children's Gift Fund has a compulsory lock-in period and offers a return of 9.63% with an investment amount of 685.25.

B) The ICICI Pru Child Care Fund, specifically the Gift Plan, provides a return of 8.33% with an investment amount of 844.27.

C) SBI Magnum Children's Benefit Fund, in its Savings Plan, offers a return of 8.24% with an investment amount of 90.35.

D) LIC MF Children's Gift Fund has an investment amount of 12.54 and offers a return of 7.06%.

2) Will mutual funds go up in 2023? 

Ans - In 2023, debt mutual funds are probably going to provide superior returns. When the RBI starts lowering interest rates, they will offer even larger returns. Want to know what's going on? When interest rates begin to decline, debt mutual funds gain.

3) What is the safest investment in 2023?

Ans- Here are the best low-risk investments in 2023:

• Series I savings bonds.
• Short-term certificates of deposit.
• Money market funds.
• Corporate bonds.
• Dividend-paying stocks.
• Preferred stocks.
• High-yield savings accounts.
• Treasury bills, notes, bonds, and TIPS