Many of us are interested to invest in mutual funds as they don’t require DEMAT accounts, and also it is hassle-free to use. Nowadays, as technology is developing day by day, investment in mutual funds through online mode has sought its growth. In this article, we discuss how to invest in mutual funds through online mode.
First, it is better to discuss the benefits that we get while investing in mutual funds. It is better to know about the benefits of investing in mutual funds before investing. So, let’s get into it!
How To Invest In Mutual Funds Online?
In this article
There are some slight changes in different websites and here are the common steps you can follow to invest online.
Step-1: Register Your Account To Invest
Step-2: Give Your Details:
Step-3: Enter Nominee Details
Step-4: Provide Bank Details
Step-5: Provide Investment Details
Here, you have to provide the type of investment plan you wish to choose.
For example, in our country, there are investment plans like a one-time lump sum or a Systematic investment plan (SIP).
Scheme and plan: If you wish to invest directly, then click an option “direct” that is mentioned in the menu and then choose the scheme you wish. The scheme can be equity, debt, hybrid, and others.
Note: If you click on the equity, you have to choose between the “Growth” and “dividend” option.
If you choose the SIP option, then you have to provide details like how much money you wish to invest in what frequency and on which date the money should be debited from your account.
You also have to provide the holding type. Choose whether you need to have a Demat account or not.
Step-6 Last But Not Least, Make Your Payment:
In this last step, you can make a payment just by checking the box for the final confirmation.
If it is net banking, then you will receive the SIP Registration Reference Number, which is to be submitted in the bank for payment bill.
But many of us are confused about which funding house he/she should invest. We are here to guide you to invest in the best fund house in India. Let’s check into that!
Investing In Mutual Funds
Whether it is offline or online, KYC (Know Your Customer) is a must and should be submitted by the investors. This document helps fund houses to know about their customers. You can register your KYC either through online or offline mode. Many funding houses are now providing E-KYC to register. Only after registering KYC, you can invest in mutual funds as stated by the Securities and Exchange Board of India (Sebi).
If you are a new customer, then you are asked to register KYC through Sebi-registered intermediary, mutual fund houses, or online platforms.
Through Offline Mode:
- Fill up the form and later attach hard copies of identity and address proofs with passport size photos.
- Visit the fund house branch or RTA or investor’s service centre for person verification.
- Later, show the original documents for verification.
Through Online Mode:
- This is paperless work and can be done in three ways to ensure the safety of the investors.
- In the first method, you have to submit your scanned documents by logging in to their official website. Then they ask you for person verification through a video call. After all this process, your KYC is approved.
- In the next method, you will get only PAN/ Aadhaar based KYC and it is only verified through a one-time password sent to your phone number.
- The last option, the customer can complete KYC through a registered device operated by the fund manager using a biometric device.
- Documents that are required while investing in mutual funds.
- You will require an Aadhaar card, PAN card, income proof, Passport, residence proof, ration card, voters ID card, utility bills, bank statement, or passbook.
- While investing, you require bank account number and type, IFSC code, E-mail, and phone number.
Where To Invest In Mutual Fund?
1. Mutual Fund Houses:
You can physically invest by going to an AMC or fund house website and check every detail regarding investment policies once your KYC is done. Some AMC has apps to invest. The best part of direct investment is you don’t have additional charges like brokerage charges etc.
2. Registrar And Transfer Agents:
You can go to any advisory RTA office; there you can submit all required documents and fill KYC and then start your investment. Nowadays, CAMS and Karvy are famous RTAs.
3. Investor Service Centres (ISC):
In these branches of RTAs, you can start your transactions, whether it may be investment or redemption.
4. DEMAT Account:
In this DEMAT account, all your securities like stocks, mutual funds, exchange-traded funds, government securities etc. are saved. Update with your investments through this DEMAT account.
5. MF Utilities:
It is one of the best for do-it-yourself transactions. It is free to access and also provides all types of mutual schemes to the investors. You can invest both offline and online through this MF Utilities.
6. Stock Exchanges:
Since February 2019, Sebi has allowed investors to invest in specified stock exchanges. For these investments, you have to complete the one-time online registration with NSE or BSE.
Benefits Of Investing In Mutual Funds:
Mutual funds are beneficial to an individual to get favorable benefits. Mutual funds can be invested in several instruments like equity, debt, money market, etc. there are more options why we need to invest in mutual funds.
1. Professional Management:
Your investments are managed by professionals who have great experience in this investment sector. Scheme information document (SID) consists of the profile of a fund manager who is taking care of your investments. He/she choose the best stocks and best time to invest your money so that you can relax by assuring your money is in safe hands. The fund manager keeps on track of the stock exchanges, maintains your profile effectively.
2. Higher Returns:
Compared to Fixed Deposits (FD), Recurring deposits (RD)s, it is better to choose mutual funds because of their higher returns. Mutual funds have an option to invest in different instruments like equity, debt, etc. this makes profitable because even though if one fails, there is another hope to rely on. Generally, equity mutual funds give higher returns when compared to all other instruments, but it is risky. An only experienced one can able to manage their investments in this sector. Whereas debt funds have lower risk when compared to equity funds, and also returns are more than other normal sectors.
One of the greatest benefits that come from investing in mutual funds is diversification. You can invest in different assets and different stocks. This option balances the profits and loss of your investment. For example, if one of the stock is dull in its performance, then other stock may balance it with its profits. This is why many individuals choose to invest in mutual funds.
Many fund houses have made it easy to invest in mutual funds. They also have provided an E-KYC facility to register JYC documents. But for investments over Rs.50000, physical KYC is required. This online process made investment easy and simple.
5. Low cost:
You can start your investment in mutual funds at low cost. You can start with ₹500 or ₹5, 000 whatever the amount and get high returns.
6. Disciplined Investing:
There is an option called “Systematic Investment Plan” (SIP), where you can invest in mutual funds regularly. The period can be monthly or quarterly or maybe yearly. There is also an automatic debit of your money to invest in mutual funds through this SIP option. This option makes you invest regularly without having to invest manually every time.
Now, as we have seen benefits from investing in mutual funds, it is better to know what are the different types present in Mutual funds. So, let’s check the types of mutual funds:
Type of Mutual Funds:
Basically, mutual funds are divided based upon the type of investment, structure, and nature of the schemes. Mutual funds are of 7 types when classified according to the investment and objective. They are;
i. Growth Or Equity Schemes
These types of funds are very risky, and only those who are professionals in this category wish to invest in this. They generally provide high returns when you wait for a long period of time. Again the growth sector is further divided into the diversified sector and index funds.
2. Debt Funds
For those who need risk-free returns and regular, steady returns, they can choose this type of funds. Generally, these are fixed income or debt securities such as corporate bonds, commercial papers, government securities etc. those who plan for the short-term can actually choose this option.
3. Tax Saving Funds
These are also known as equity-linked savings schemes where you can avail tax benefits according to the section 80C of the Income Tax Act, 1961. Those who wish to grow their capitals while saving tax can choose this option.
4. Open-Ended Schemes
In this type of schemes, funds are bought and sold continuously. So it is in the hands of investors whether to continue or stop investing. Purchase and sales are done at Net Asset Value (NAV).
5. Close-Ended Scheme
In this option, units are fixed and no longer available to purchase, and investors cannot exit the scheme until the end of the term
Tips To Be Followed While Investing:
- Understand your risk capacity and how much risk you are capable of with risk profiling. This ensures that you are on the safe side with risk tolerances.
- The next step is that you should be able to allocate your assets to different mutual schemes. You need to diversify your amount so that you get high returns.
- Later compare every type of mutual fund and then estimate how much to invest in that particular area.
- Check your account regularly so that you are well aware to take the next step or else choose the best advisor to take your side.
Note: There are charges issued by AMCs while investing in mutual funds, so check them properly and make sure that there are no hidden charges. The charges include administration fee, fund value calculated according to the Net Asset Value (NAV) and charge loads.
Frequently Asked Questions:
Q1) Can we buy Mutual funds online?
Q2) How do beginners invest in Mutual funds?
All you need to do is start with low investment as possible. For example, start to invest with Rs.500.
Then diversify your amount to different schemes like Debt, Equity. In India, it is better to start investing in Gold because the value of this in the market never goes down.
Later change your account to SIP if you are experienced and willing to invest more.
The major benefit of investment in Mutual funds is you can invest without a DEMAT account.
Q3) Which banks offer better mutual funds?
Q4) Which type of mutual fund is best?
a. Mirae asset large-cap fund small-cap funds, Axis Blue-chip Fund Midcap Fund, ICICI Prudential Blue-chip fund b.The midcap fund, SBI Blue-chip Fund Multi-cap funds,
b. SBI Magnum Multi-cap funds balanced funds.
Q5)Are mutual funds safe?
Q6) What is Blue-chip?
Q7) What are the 3 types of Mutual funds?
Ans:) Generally, mutual funds are divided into four categories; Equity, Fixed income, money market or hybrid (balanced).
Just remember, while investing in the mutual funds never neglect the risk capacity. Then asset allocation is important. Thereafter, comparing and investing in the mutual funds is required. As a beginner, explore and then invest. All the best!!