KNOWLEDGE CENTRE Mutual Funds Investment Guide / How To Start Investing In Mutual Funds Instantly

How To Start Investing In Mutual Funds Instantly

How to invest in mutual funds instantly

Knowing the many benefits of mutual funds, there are many who would like to invest in mutual funds. However, people often are stuck because they are lost as to how to process with the process of investing in mutual funds. Investing in mutual funds is actually very easy. Let us see how to proceed with it.

How to invest in Mutual Funds?

If you want to invest in mutual funds, you need to be Know-Your-Customer (KYC) compliant. This requires submitting address and date of birth proofs, permanent account number (PAN) copy, and photographs. In addition, you will need a bank account in your name with the Indian Financial System Code (IFSC) and Magnetic Ink Character Recognition (MICR).

Application form for online mutual fund purchase

You will need to complete an application form to invest in your chosen mutual fund schemes. In case you want to invest through a Systematic Investment Plan (SIP), an additional form must be duly filled and submitted. The SIP form includes information like the installment amount, frequency of investment, and date on which you want to invest.

How to invest on behalf of minors?

If you are investing in mutual funds on behalf of a minor, you will need to fill a third-party declaration form. However, only parents may invest on behalf of minor children. You will need to submit proof of relationship. In case a child has no parents, a court-appointed guardian may invest on behalf of the minor.

Where to buy mutual funds?

There are multiple ways for investing in mutual funds. You may invest online or offline in direct or indirect plans. Here are eight available options.

1. Direct plans

All asset management companies (AMCs) offer direct plans. Such plans are purchased directly without any intermediaries. These types of plans have a lower expense ratio when compared to other schemes offered by the fund houses. Direct plans do not levy commission or distribution expenses, which increases the Net Asset Value (NAV).

2. Through intermediaries

Several intermediaries such as banks, stockbrokers, distributors, individuals, and small advisories are available. All these intermediaries are registered with the Association of Mutual Fund in India (AMFI). You may find intermediaries on the AMFI website. These intermediaries provide you with the application form and help you complete the same. Intermediaries will submit your form and even provide you with the account statement. Generally, you will have to pay a flat fee to avail of their services.

3. Independent Financial Advisors (IFAs)

IFAs act as agents to help you understand how to invest in mutual funds. They will provide you with the application form and also submit the same along with other necessary documents to the AMCs.

4. Fund houses

You may directly invest in funds through the AMCs. However, the first time you invest you will need to visit the fund house’s office. You may buy mutual funds online or offline for all your future investments. Some AMCs may send their agents to help you fill the application form, procure the check, and provide the acknowledgment.

5. Online portals

Several independent portals offer you the facility to buy mutual funds online. Most of these service providers tie-up with banks to ensure quick and secure transfer of principal investments. Often, these online portals levy an initial fee for account setup and help facilitate investment and redemption of mutual funds units in the future.

6. Online trading account

If you have a demat account and an online trading account, you use these to invest in mutual fund schemes of your choice.

7. Electronic Clearing System (ECS)

This facility is beneficial when you want to know how to invest in mutual fund SIPs. You may provide an instruction to your bank wherein the predetermined amount is directly debited from your account on the specified date.

8. Through your bank

Several banks act as mutual fund intermediaries. They may offer mutual fund schemes available from one or more AMCs. You may directly invest from your bank branch in your preferred mutual fund scheme.

A large number of fund houses offer different types of mutual fund schemes such as equity, debt, and balanced plans. Making the right choice from the hundreds of available schemes is very confusing especially if you have no previous investing experience.

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