Vishu is the harvest festival of Kerala. Malayalis worldwide celebrate Vishu with Vishukani, opening their eyes to a bouquet of decorated flowers, vegetables, fruits, rice, and god’s idol lit with a lamp. Vishu sadhya—rice served on a banana leaf with many dishes, like avial, thoran, pachadi, kootukari, achar, injipuli, papaddam, and chips—and Vishu padakkam (bursting firecrackers) are part of the festivities. But the most important one is Vishu kaineetam, where elders hand out money to younger ones and bless them.
In my childhood, Vishu was always celebrated at my dad’s native place in the morning, and then we visited my mom’s native place in the afternoon. This ensured that I got Vishu kaineetam from my dad’s parents and siblings, as well as my mom’s parents and her siblings.
The pocket money collected was more than enough to buy a new pair of jeans and a T-shirt.
Times have changed. Now that I have grown older in the family, I have to give out Vishu kaineetam to my kids and their cousins, my nephews and nieces. Instead of giving them cash, let us notch it up a bit and try gifting them a monthly SIP of ₹100.
To gift ₹100, you might need to open a minor demat account for your kids. You might also have to ask your relatives to open a demat account for their kids. Setting up an SIP of ₹100 is easy for your kids, but for your nephews and nieces, you might have to use the gift mutual fund option. Let us discuss that today!
Step 1: Apply for a minor PAN card.
Visit the website https://www.pan.utiitsl.com/PAN/ or https://onlineservices.proteantech.in/paam/endUserRegisterContact.html and apply for a new PAN card for your child. If they already have one, you may skip this step.
The online application form is neatly presented, and this should be easy for you to complete. If you are not comfortable doing it online, you may even visit the nearest Akshaya Kendram.
Step 2: Apply for a minor bank account.
Visit any major bank and submit your child's PAN card and Aadhaar copy to open a minor account for them. Make sure you take them along so they learn how the banking system works.
Step 3: Open a minor DEMAT account online.
There are many brokers providing minor demat accounts. Visit their website and apply for a minor demat account.
This option may be available only if you already hold a demat account, as the child’s demat account is held as a secondary account to yours.
You will be prompted to enter your child’s PAN number and date of birth. Similarly, complete the entire procedure, and your account should be up and running in 2 to 3 days.
Note: Make sure you complete this process by April 10, so that you can send the Vishu kaineetam on April 15.
Step 4: Schedule the SIP or initiate a gift.
Once their demat account is ready, you could choose to either gift them the Vishu Kaineetam amount or set up a monthly SIP as per your preference. The amount that can be gifted starts at ₹100.
There are many mutual fund houses in India that allow transactions as low as ₹100. Open up the demat account and explore the mutual fund portal to see the various offerings. To set up a standing instruction, a process called a debit mandate is also required. This amount will be deducted from your bank account and credited to your child’s demat account.
To gift a mutual fund to your relative’s kids, you need to use the Gift-Transfer facility.
There are many advantages of setting up an SIP in your kid’s name.
Learn financial literacy: teaching them how to track their money, assess valuations, and calculate CAGRs is the right way to teach financial literacy.
Learn about the stock markets: investments in equity not only go up, but they can also go down and remain volatile. Accepting this risk: reward would help them learn more about the financial markets.
Power of time: time is a good friend to assets and an enemy to liabilities. Learning to separate out the assets and liabilities by mapping them to the power of time is the best education that you could impart.
Prep them for investing: when they get a job later, they will know how to handle their income and maximise accumulation. Their expenses would be under total control as they would prioritise investing over spending.
That's it!
What are you waiting for? Open a demat account in your kid’s name and set them up on the right track for personal finance glory.
The writer is a SEBI Registered Investment Adviser (INA000021757), SEBI Registered Research Analyst (INH000025054), and author of ‘How to join the top 1% options traders club’.
DISCLAIMER: Investments in the securities market are subject to market risks, including the potential loss of principal. Past performance does not guarantee future results. Information provided is for educational purposes only and should not be considered financial advice. Investors should read all related documents carefully and consult a certified advisor before investing. Registration granted by SEBI and Enlistment with RAASB/BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The investor is requested to take into consideration all the risk factors before actually trading in stocks or derivatives.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
