Zerodha's youngest client is just 28 days old, says co-founder Nithin Kamath
The parents opened a minor's account and made their first investment about a week later, breaking the earlier record of 64 days, Kamath said.
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Discussion on investing for children's futures has revived, following a story shared by Zerodha co-founder Nithin Kamath about a client who is only 28 days old. The account has sparked fresh debate on investing at a young age and on financial planning for children.
People generally think about investing after they get a job or start earning. But in today's times, investing is considered important at every turn and in every circumstance. Such planning is necessary for children's futures, and it can begin just days after their birth.
Kamath said Zerodha's youngest client is only 28 days old. The child's parents opened a small account in the child's name and made their first investment about a week later. Earlier, the company's youngest client was 64 days old, so the record has changed in about a year. The amount invested by the new client and the financial product chosen have not been made public.
What exactly is a minor's account? It is an account through which investments can be made in the name of a minor child. It is operated by the parents or legal guardian. The child does not take buying and selling decisions in the stock market on their own.
Opening an account in a minor's name at Zerodha requires documents of both the child and the parents. These may include PAN, Aadhaar details, proof of date of birth and bank account documents. The account-opening process and verification are mandatory.
Why do parents invest early for their children? A major reason is to prepare financially for the child's education, higher studies and other future needs. Some parents are stressing on building the habit of saving and investing from a young age. Investing over a long period can bring the benefit of compounding, as the returns earned on an investment can contribute to later returns. However, actual outcomes depend on the amount invested, the duration, the investment option chosen and market performance.
Before investing in a child's name, families should assess their financial goals, risk appetite and future needs. Returns in the stock market are not guaranteed and the value of investments can fall. The Zerodha case shows that some families are now planning financially for their children's futures from the very first days after birth.
