• Discovery

One of the most important components of any successful advisory relationship is truly understanding who you are as a person. With our Discovery Process, we focus on what is most important to you, both financially and personally. We will look at all the major aspects of your financial life, including your specific values and goals as well as your time horizon, income and liquidity needs and ability and willingness to take risk. Together, we will define your personal definition of financial success and work with you to translate this into prioritized goals. As part of this step, we will also make a "Mutual Commitment" to working together and putting your plan in place.

• Analysis

In order for us to thoroughly understand your situation, we will take a comprehensive inventory of your current financial position, including strengths as well as any gaps or weaknesses. We will also analyze the effectiveness, composition and expenses of your existing portfolio. We will analyze specific items for action to make sure that your goals and financial situation are aligned.

• Development

Based on our analysis, we will develop a long-term wealth plan focused on getting you from where you are today to where you want to be in the future. Through this process, we will address any items that need clarification, and make alterations based on additional information. We think that an open, honest dialogue about your financial needs, beliefs, expectations and concerns is critical to any successful advisory relationship.

• Implementation

The next step is the implementation of your plan. In addition to creating your investment portfolio, we will also work with a team of financial professionals to address all of the non-investment action items we've identified. You will also receive an Investment Policy Statement (IPS), which documents what we have agreed to and assigns responsibility and accountability.

• Monitoring

Your plan is never static. That's why we'll make our Discovery Process part of our ongoing meetings, so that your plan always reflects your life. We will monitor your plan closely and provide you with clear and concise reporting. In addition, as financial markets rise and fall, your portfolio's exposure to stocks, bonds, cash and other investments will tend to fluctuate as well. Through periodic rebalancing we will make sure your portfolio maintains its target allocations. This helps control the level of risk in your portfolio and minimizes emotional decision making.

Investments for your child’s long-term needs and plans

While bringing up your little one, you would want the best for him or her. You can invest a portion of your income in a gift mutual fund for your child to be financially prepared for numerous purposes. You can help your child achieve his or her aspirations with the help of these funds. These funds should be taken for long-term goals. While investing in such a fund, one should ignore short-term market fluctuations and focus on the returns that will be earned in a few years.

Benefits of child mutual fund plans

• Children’s gift mutual funds encourage individuals to invest funds for long-term growth. The returns derived from such long-term plans will help their children when they grow up.

• A child can achieve his or her aspirations with the help of these fund plans without having to sacrifice them due to financial limitations.

• When a child mutual fund plan is taken, the investor would not redeem or withdraw funds without thinking properly. It discourages investors from exiting suddenly without sticking to it for a substantial duration.

• Child mutual fund plans assist in allotting several funds for appropriate goals. Thus, your investment portfolio will have clear-cut segments for specific purposes. As a parent and as a responsible investor, you will find it easy to evaluate the performance of each segment. If there is an issue with any segment, you can take necessary steps to rectify it without any struggle. You will find it easier to monitor categories separately instead of monitoring every goal together.

• With child mutual fund plans, different goals for different phases of a child can be attained. For example, a child’s schooling, higher education, healthcare needs, wedding plans, home purchase plans, car purchase plans, etc. Hence, categorisation of funds in a plan is essential and beneficial.

• If your child mutual fund plan is a debt-based scheme, you can enjoy tax efficiency extensively. When you invest in your child’s name, you do not have to worry about paying taxes for several years. Hence, they are very good for long-term investments. Until you redeem a fund unit, you will not face any tax implication. Moreover, the indexation benefit will actually minimise your tax to almost nil when time goes by.

• You can enjoy customised or tailor-made fund schemes when you want to take a children’s gift mutual fund scheme.

How children’s gift funds are balanced funds or hybrid funds

Children’s gift funds can be classified as hybrid funds or balanced funds. These gift funds for children will be invested in both equity shares and debt instruments. Hybrid funds can be broadly divided into hybrid-equity oriented funds and hybrid-debt oriented funds depending on the exposure of the schemes to equities.

• Hybrid equity-oriented funds: When most of the assets of your fund scheme are invested in equity, your scheme will be considered as a hybrid equity-oriented scheme. In such a scheme, your fund’s assets will have more exposure towards equity than towards debt products.

• Hybrid debt-oriented funds: When your fund’s assets are invested more in debt products, your scheme will be treated as a hybrid debt-oriented scheme. In this fund, your funds will have more exposure towards debt products when compared to equity products.

Key points to evaluate before buying Children’s Gift Mutual Funds

• Objective of the Fund – Find out the asset allocation strategy used in the fund and the investment strategy. Factors to be looked into are whether the funds are equity-oriented or debt-oriented. One should also evaluate the exposure to risk.

• Lock-in Period – Most gift mutual funds provide an elective lock-in facility. This enables the investor to ensure that the investment will be protected till the child becomes 18 years old.

• Expenses – It is important to note the overall expenses incurred, i.e., the expense ratio involved. The exit load plays a very important role – this may affect the overall returns accrued on the investment.

• Documentation – In order to invest in a gift mutual fund, the investor should submit some KYC documents. The KYC documents are details regarding the child and the investor, i.e., parent or guardian. While redeeming the fund and/ or at the time when the child attains the age of maturity, additional KYC documents have to be submitted.

• Returns – Before investing in a Children’s Gift Mutual Fund, it is necessary to compare this against other equity funds in order to evaluate the opportunity cost. This helps an investor in choosing the most appropriate mutual fund scheme that would generate high returns.

Exit load related to children’s mutual funds

When you plan to take a mutual fund for your children, you need to take note of the exit load associated with it. Most mutual fund houses want to retain parents as their customers for a long period. Hence, they charge high exit loads or penalties when one is interested in making an early redemption.

Earlier, there were entry loads for most mutual funds. Once the entry load was banned, fund houses typically charge around 1% as exit load when an investor wants to redeem the fund before completing 1 year. When you plan to exit a child mutual fund plan, you will have to be prepared to pay an exit load of up to 4%. Moreover, the minimum period for an investor to stay with a child mutual fund plan can go up to 5 years. There are some plans that charge an exit load even if one quits a mutual fund scheme after 7 years.

In one way, this is helpful to investors as they are encouraged to make long-term investments and in turn, these investors will be able to witness an extensive growth of their funds, which can be used for numerous purposes.