What are mutual funds?
Mutual funds are an
investment vehicle for investing in stocks and bonds. They pool money from a
large number of investors and invest this money in securities such as stocks,
bonds, money markets instruments, and similar securities. Investing in these funds
is much easier than buying or selling individual stocks and bonds on your own.
In this article, let us take a look at how to invest in mutual funds online.
These funds are managed by
professional fund managers, who invest the fund's money in various securities
and attempt to produce capital gains for the fund's investors. Every
investor has a share in the gains or loss of the fund.
How to invest in mutual funds online?
With the rapid growth of the
internet, the use of online services has become quite popular among people.
Most of the financial transactions are completed online, whether it is
shopping, transferring money or investing in various funds. You can invest in
mutual fund online through AMC (Asset Management Company) websites, brokers’
platforms or independent portals.
Here’s a complete guide on how to invest in mutual funds online?
Investing online in these funds
is very easy, fast and convenient.
#1. KYC compliance
KYC compliance is compulsory
for investing in Mutual Funds in India. You have to fulfill the KYC
verification requirement with a KYC registration agency. KYC verification is a one-time
exercise post which you can invest in any mutual funds in India. There are two
ways to become a KYC compliant - offline KYC process and eKYC process (online).
If you are not a KYC-compliant already then you can do it online. These days,
it is possible to complete your KYC online through certain fund houses or
transfer agents in the following ways.
PAN card based e-KYC
Some fund houses offer this
service. The entire process is easy and simple. You have to fill a form online.
Take a print out of this form, paste a photograph and sign on it. Now upload
its scanned copy along with other relevant documents. Documents required would
be PAN card, proof of identity, proof of address and a photograph. Your IPV (in-person
verification) will be done using a webcam or your smart phone without going
anywhere.
Aadhaar card based e-KYC
In this process, you have to
provide your Aadhaar number and the mobile number (registered with the Aadhaar card). An OTP will be sent to your registered mobile number. You have to enter
the OTP. You have to also upload a scanned self-attested copy of your Aadhaar
card. This method has some restrictions. You can invest up to a maximum of Rs.
50,000 per annum in one fund house.
Always opt for PAN card
based e-KYC instead of Aadhaar card based e-KYC to avoid investment limits.
Check your KYC status
You can check your KYC
status with your PAN number with any of the KYC registration agency
#2. Decide your fund
Once you are KYC verified,
you can invest in mutual fund online. Now you need to identify which fund is
best suitable for you. There are various types of funds available in the
market. Therefore you should choose the mutual fund schemes based on your risk profile
and personal goals. Here you also need to decide the medium of your investment
- Direct or through an advisor or a distribution house.
#3. Invest online
Once you have decided the
mutual fund scheme you want to invest in. Visit the website of the Mutual Fund
Company or AMC (Asset Management Company) whose funds you want to invest in.
Complete a simple registration process and create a folio for your investment.
All the subsequent transactions in the folio will be possible online using your
bank account. But if you want to invest in other fund houses, you need to go
through the entire process again through their websites.
However, if you choose to
invest through independent portals then you have to open an account with them.
Once you have opened an account, you can buy funds of various fund houses
online using your bank account. You can also invest in mutual fund online
through a broker’s portal if you have a Demat account.
Systematic Investment Plan (SIP)
You can also start a SIP.
You need to decide the date and duration of the SIP. You have to give a
standing instruction to intermediary / Mutual Fund Company and the money gets
debited automatically from your bank account on the investment date and gets
invested into SIP. This can be done by submitting a mandate to the Mutual Fund
Company / intermediary or by adding the Mutual Fund Company / intermediary as a
biller in your internet banking.
Also read: Equity Linked Savings Scheme (ELSS)
Also read: How to set your financial life in order?
Also, read: Benefits of SIP | Advantages of SIP
Also, read: 7 Investments for tax free income in India
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How to invest in mutual funds
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