What is a mutual fund custodial account?

The term custodial account generally refers to a savings account at a financial institution, mutual fund company, or brokerage firm that an adult controls for a minor (a person under the age of 18 or 21 years, depending on the laws of the state of residence).

Can a minor have a mutual fund account?

Anyone under the age of 18 (minor) can invest in Mutual Funds, with the help of parents/legal guardians until the age of 18. The minor must be the sole account holder represented by the parent/guardian. Joint holding is not allowed in a minor’s Mutual Fund folio.

How can minors buy mutual funds?

For opening a minor’s mutual fund folio, there are 2 key documents required. Firstly, the proof of age and date of birth of the minor is required. This can be either provided in the form of the birth certificate issued by the municipal authorities or a passport.

Can a 16 year old invest in a mutual fund?

Yes, every mutual fund house allows investment in any scheme in the name of a minor child, whose age is less than 18 years. There is no age limit or restriction on the investment amount.

How to open a mutual fund account for a minor?

Complete the application by selecting “custodial account” as the account type. List the minor with her Social Security number as the owner/minor and an adult to act as the custodian of the account. The custodian, typically a parent or grandparent, has power over the account until the minor reaches legal age.

Who is the custodian of a custodial account?

A custodial account is generally created by a parent or grandparent for the benefit of a minor child or grandchild. When you put money into a custodial account, you make a gift to the minor beneficiary of the account—even though the minor does not control the account. The account creator usually acts as the account’s custodian.

Can a custodial mutual fund be used for financial aid?

Money in a child’s name in a UTMA account will be counted as assets when applying for college financial aid. A large custodial mutual fund balance might limit the amount of aid the minor can receive.

When to open a custodial account for a minor?

This custodial account is: 1 Considered the minor’s asset 2 Transferred to the minor at a certain age (between 18–25) 3 Made with after-tax money, though there are tax benefits 4 A brokerage account for investing 5 Factored into financial aid eligibility 6 A way to directly transfer wealth