How to Buy Mutual Funds Online in India?
In this article, we are going to discuss different ways by which you can buy mutual funds online in India. However, before we begin, let us consider a few crucial topics concerning buying online mutual funds in India.
Things to need to know before you buy mutual funds:
There is a large number of people in India who invest in mutual funds without exactly knowing how it works or how to pick the right mutual funds that can give them winning returns. However, we do not want our readers to take the same path. Therefore, before you purchase your first mutual fund online in India, here are a few important articles that you should read:
- What is a mutual fund? And what are its different types?
- Common Mutual fund terminologies
- Lump-sum vs SIP investment and the route you want to choose.
- How to pick the right mutual funds?
- Mistakes while investing in mutual funds
Direct vs. Regular Mutual Funds
Any mutual fund that you might be planning to invest offers two plans — either direct plan or regular plan.
Since Jan 2013, mutual funds have started offering direct plans for all their existing funds. The difference between a direct plan and a regular plan is that you can save a lot of money while choosing a direct plan investment route as there are no intermediates involved here.
In direct plans, You do not need to make your investment through distributors, and hence it can save you a lot of intermediate expenses. Therefore, you’ll be getting a higher return on your portfolio despite the same fund. The difference in returns from direct plans compared to regular plans can be as high as 1–1.5%. This can be a substantial amount if you’re planning to invest for a long time to build a considerable corpus.
Anyways, as investing in regular plans is comparatively more accessible, that’s why people go for it. Nonetheless, in the last few years, there has been a rise in a lot of trusted websites and mobile apps to make direct mutual fund investment fast and easy. We’ll look more into these later in this article.
Overall, you can select anyone — either direct or regular plan, depending on your preference. However, we’ll highly recommend you to choose the direct investment route while investing in mutual funds online in India.
Know Your Client (KYC)
As per the regulations by SEBI, you’ll need to complete your KYC before you invest in mutual funds in India. This is because KYC helps in verifying the buyers and eliminating the duplication across intermediaries. It also makes online investing easier and efficient.
But if you’ve not done your KYC, do not worry, thinking it will involve a lot of documentation and labor. In the era of fast internet, you do not need to move even an inch from your sofa to complete the KYC. All can be done online, and that too within minutes.
Now, if you have already invested in any fund earlier, either offline or online, your KYC might be already done. Therefore, you do not need to re-complete your KYC. Here, simply check your KYC status online.
For already registered users, they can check their KYC status online using their PAN card with any of the following KYC registration agency
How to get your KYC?
In order to get your KYC done, you’ll require following documents: PAN CARD, Proof of Identity (Aadhar card, Driving License, Voter Id, etc.), Address Proof and Passport size photographs
You’ll need to submit copies of all the self-attested documents while submitting them for verification. Therefore, if you do not have these documents right now, first get them.
Now, almost all mutual fund distributors and broker websites provide a link to complete your Know-Your-Client (KYC) online. You can visit the AMC website, upload your documents, and complete your KYC.
For example, if you are interested in investing in SBI mutual funds, you can visit their website. On their website, you can find the link to complete the KYC verification process.
Else, if you are planning to invest through any popular mutual fund apps, you can upload your documents inside the app, and they will help you get your KYC verification done.
How to buy mutual funds online in India?
Now that you have understood the basics of regular vs. direct funds, e-KYC, etc., let’s dive into the main topic of this article — how to buy mutual funds online in India.
Here are a few ways how you can invest online in mutual funds:
1) AMC Website
The fastest way to buy mutual funds is through AMC websites as you’ll buying directly from the AMC and eliminating all the intermediaries. Mutual funds are managed by the AMC’s, i.e., Asset Management Companies. You can buy all the funds offered by these fund houses from their websites.
Now, to buy a mutual fund from the AMC website, first, visit the site and download the application form. Here, you’ve to fill your details and submit along with the photocopy of PAN, KYC letter and initial cheque.
The first time when you invest in any mutual fund through AMC, you’ve to go to the AMC’s office to submit documents and make your investment. Anyways, once it is done, you can make all your future investments online. You will be assigned the PIN and folio number. Hence, you can perform the subsequent transactions ‘online’ using your net banking. Also, a lot of these AMC’s may send their Agents to your house/address to collect the application form, cheque, and other docs, which can save your time.
Anyways, if you are planning to invest in various funds offered by different AMCs, you have to perform the same procedure for all the mutual fund companies. However, this may not be very convenient.
For example, if you are planning to invest in five mutual funds, you have to visit their AMC websites one-by-one to register. Although the KYC verification procedure will not be repeated, still tracking and monitoring all the funds will also be a little difficult if you have invested through multiple AMC websites.
Note: A few of the popular mutual funds companies in India are: Aditya Birla Sun Life Mutual Fund, DSP BlackRock Mutual Fund, HDFC Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual Fund, IDFC Mutual Fund, IIFL Mutual Fund, Kotak Mutual Fund, L&T Mutual Fund, Mahindra Mutual Fund, PPFAS Mutual Fund, SBI Mutual Fund, Shriram Mutual Fund, TATA Mutual Fund and Union Mutual Fund.
2) Broker Platforms
If you have already opened a demat account with any of the big brokers in India, you can buy mutual funds online using your brokerage account. Most of the major brokers in India, like ICICI direct, HDFC securities, Kotak securities, Zerodha, etc. have the facility to buy mutual funds from their portal.
Now, buying funds using broker platforms is a simple way to purchase mutual funds online in India. All you need to do is to log in to your account, select the scheme you want to invest, and complete the payment. The mutual fund units will be credited directly to your existing demat account.
3) Independent Websites/Apps
You can also buy mutual funds online in India through independent websites or apps. A lot of Indian websites like Funds India, Groww, etc. provides the facility to their clients to invest directly in mutual funds at no commission.
A few of the popular apps for direct mutual fund investments are:
- myCAMS Mutual Fund App
- KFinKart- Investor Mutual Funds
- ETMONEY Mutual Fund App
- PayTM Money Mutual Funds App
- KTrack mobile app by Karvy
Another benefit of using these apps and websites to buy mutual funds online in India is the fast account opening process and hassle-free investing. In fact, you can open your account within minutes using these platforms if you have the digital copy of all the required documents available on your phone.
Further, on these independent platforms, monitoring your funds and transacting is also very simple. These websites have a tie-up with most of the major banks in India to facilitate fast fund transfer at the time of investing.
A majority of people do not invest in mutual funds because they’re afraid of documentation work and believe that investing in mutual funds requires a lot of work. However, as discussed in this article, there are multiple ways through which you can invest in mutual funds online in India.
If we conclude the article, investing in mutual funds through the AMC website will be cheaper and includes no extra cost. However, the biggest concern with this approach to remember all the PINs and passwords at different AMC websites.
On the other hand, investing in mutual funds online in India through the independent websites/apps offers the clients a ‘single login portal’ for the consolidated view of the holdings.
Finally, purchasing mutual funds from the brokers through a demat account is a more relaxed approach compared to the above two. Here, the customers can also get added benefits like access to the research reports to make a better decision. However, they have to pay extra costs like demat account maintenance charges. Besides, not all mutual funds are available/partnered on the broker website. Therefore, for purchasing some funds, you have to visit the AMC website.
If you’re a beginner, we’ll recommend buying mutual funds online in India using independent apps like Groww, myCams, etc. And once you’re comfortable with the buying process, choose the route of investing through AMC websites.
Parting tips for investing in mutual funds
Before we end this article, here are a few of the final tips for beginners to invest their money in mutual funds:
- Always go with the direct mutual fund plans. It will save you a lot of costs in the long run.
- Start investing through SIPs instead of lump-sum. It will help you to avoid the risk of timing the market by averaging out.
- Finally, diversify and add multiple funds with time. Do not spend all your money on a single mutual fund, no matter how appealing it may look.
Quick Note: If you are new to investing and want to learn how to invest in mutual funds from scratch, check out this amazing online course: Investing in Mutual Funds- A Beginner’s course. Enroll in the course now to start your journey in the requisite world of investing today.
That’s all for this post. I hope it is useful for you. Let us know if you have any queries regarding buying mutual funds online in India by simply commenting below. Happy investing.