Best Mutual Fund Plans for Children in July 2025

Investing in mutual funds for children is a strategic way to secure their future financial needs—be it education, marriage, or other milestones. Children’s mutual fund plans come with a mandatory lock-in period of 5 years or until the child turns 18, promoting disciplined, long-term investing. These funds usually carry a moderate risk profile, offer diversification, and potential tax benefits.

In this article, we break down the top mutual fund plans for children you can choose from to protect their future.

Top Mutual Fund Plans for Children in July 2025

How Are Mutual Fund Plans for Children Taxed As per the Budget 2025?

Equity-Oriented Funds (holding >65% in equities)

• Short-Term Capital Gains (STCG): 15% if redeemed within 1 year.
• Long-Term Capital Gains (LTCG): 10% on gains exceeding ₹1 lakh annually, if held for more than 1 year.

Debt-Oriented Funds (holding <65% in equities)

• Gains are added to the investor’s income and taxed as per their income slab.
• No indexation benefit available post the 2023 amendment.

Section 80C Benefits

• Some eligible child-focused mutual fund schemes offer tax deductions up to ₹1.5 lakh per year under Section 80C.

Gifts for Children

• Investments made as gifts from relatives are tax-free at the time of gifting.
• However, capital gains at the time of redemption are taxable in the hands of the parent/guardian.

Read more: Best Flexi Cap Funds in July 2025: Kotak Flexicap, Parag Parekh Flexi Cap and More Based on 3Y CAGR

Conclusion

Choosing the right mutual fund plan for your child is about more than just returns—it's about building a foundation for their dreams. While some plans offer impressive long-term growth, others prioritise stability and lower costs. A balanced approach, tailored to your financial goals and time horizon, can help you stay prepared for key milestones like education or marriage. Start early, stay consistent, and let time and discipline work in your favour.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.