Definition
Children's Fund
A children's fund is a solution-oriented scheme aimed at building a corpus for a child's future, with a lock-in until the child turns 18 or five years.
Under SEBI rules, children's funds lock money in for at least five years or until the child reaches 18, whichever comes first. They are typically held in the child's name with a guardian operating the folio.
The portfolio is usually a hybrid mix that can be tailored to the time left until the goal. As with retirement funds, the enforced lock-in encourages long-term saving, but a plain equity fund earmarked for the goal can offer similar results with more flexibility.
Related terms
- Retirement FundA retirement fund is a solution-oriented mutual fund designed for retirement savings, with a lock-in of five years or until retirement age.
- Lock-In PeriodThe lock-in period is the minimum span during which a ULIP's funds cannot be withdrawn or fully accessed, set at five years in India.
- Solution-Oriented FundSolution-oriented funds are goal-specific mutual fund schemes built around retirement or a child's future that carry a mandatory minimum five-year lock-in.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.