How to start investing in mutual funds online?

For our previous generations, investments usually meant fixed deposits, post office saving schemes, or real estate. For the more adventurous ones, they might have invested in some shares of a couple of well-known companies. But not anymore. Investors today have an incredible variety of tools, some of which were unheard of a decade ago such as MLD, Crypto Currency, REIT, Peer Peer Lending, NFT, SGB, and ETFs. The new-age investor doesn’t shy away from taking calculated risks in his investments and investing in mutual funds is a great option for them. Dedicated apps help investors make MF investments with just a click. For seasoned investors, the switch from an offline mode to an online mode of investing in mutual funds could prove to be overwhelming.

Things to Consider Before Starting Online MF Investments

Before you start investing in mutual funds online, you should know about the following:

Do proper research before deciding on an MF scheme, depending on your financial goals, investment horizon, and risk profile.
Examine the track return of the mutual fund investment. MF returns, however, shouldn’t be the only deciding factor. It is advisable to opt for a mutual fund house with large assets under management (AUM).
Based on your risk profile, investment objectives, age, and time horizon, your investment portfolio must have the best mutual funds from different categories.
Check and compare charges of different online mutual fund investment platforms.
Check the taxation rules of equity, debt, and balanced mutual fund schemes.

Modes of Online MF Investments

Companies that manage mutual funds are called Asset Management Companies or AMC. You can purchase mutual funds investment schemes via either of the following ways:

Directly from the AMC Website: MF investments purchased through the AMC of the particular mutual fund are called Direct Plans. The disadvantage of the mode is that you can invest in mutual funds of a particular AMC or fund house only. There are no distributor commission charges as you are buying directly from the AMC.
Through an Integrated Platform: An integrated online mutual fund investment platform is a single account access that helps with investing, tracking, and managing all your mutual fund investments with various AMCs. Most such AMCs have mobile applications that make investing fast, safe and convenient. These platforms are distributors for various AMCs and are paid a commission by the AMC.

How to start investing in mutual funds online?

Before you start making MF purchases, make sure that your MF KYC is verified. You can complete your KYC at a KRA (KYC Registration Agency) online by filling out the KYC registration form and uploading the self-attested identity proof such as PAN Card and address proof such as Passport/Driving License/Voter ID and also a passport size photograph. You will also have to complete the IPV (In-Person Verification) by SEBI-approved agencies.

There are some common steps for online mutual fund investments via the AMC’s website or an integrated mobile app:

Step 1: Open a new investment account on the MF website or App.
Step 2: Provide personal details for the investment.
Step 3: Fill FATCA form.
Step 4: Provide bank details.
Step 5: Upload an image of the canceled cheque.
Step 6: Verify KYC through Aadhaar.
Step 7: Select the best-suited mutual fund for you.
Step 8: Choose the payment type (SIP or lump-sum) and the amount.
Step 9: Transfer the requisite funds from your registered bank account. Some apps may require you to credit their wallets with funds before you can invest.
Step 10: A folio number is generated and the purchased mutual fund is added to your investment portfolio.

Conclusion

Intelligent investors often have a separate budget to fund their investments. The minimum investment required for a mutual fund via the Systematic Investment Plan (SIP) is Rs 500. Smart investors are disciplined, patient, and consistent in their approach. Don’t be just an investor, be a smart one.