According to Zerodha co-founder Nitin Kamath, the company's youngest customer is just 28 days old. His parents started investing in his name to prepare for future financial needs.
Zerodha: New trend of investing in the name of children, how does a demat account work?
While people typically consider investing after starting a job or earning a living, financial planning for their children's future begins within days of their birth. Zerodha co-founder Nitin Kamath shared the story of a customer who was just 28 days old. This news has sparked a new discussion about investing at a young age and financial planning for children.
Nitin Kamath shared the information, stating that Zerodha's youngest customer was just 28 days old. The child's parents opened a minor account in his name and made their first investment about a week later.
Previously, the company's youngest customer was 64 days old. This record has been changed in about a year. However, details about the new customer's investment amount and chosen financial product have not been made public.
What is a minor account?
A minor account is an account that allows investments to be made in the name of a minor child. It is operated by a parent or legal guardian. The child does not make their own trading decisions in the stock market.
Opening an account with Zerodha in the name of a minor requires relevant documents from the child and guardian. These may include PAN, Aadhaar details, proof of date of birth, and bank account documents. Account opening requires the completion of the prescribed procedures and verification.
Why are parents investing early for their children?
Financially preparing for children's education, higher education, and other future needs is a key reason for starting to invest. Some parents are emphasizing the importance of inculcating savings and investing habits from a young age.
Maintaining investments over the long term can benefit from compounding, i.e., compounding. Returns on investments can also contribute to future returns. However, actual results depend on the investment amount, the period, the investment options chosen, and market performance.
It is important to understand the risks before investing.
Before starting an investment in a child's name, families should assess their financial goals, risk appetite, and future needs. Stock market returns are not guaranteed, and the value of investments can decline. This Zerodha case demonstrates that some families are now beginning to plan financially for their children's future from the earliest days of their birth.
