How to invest in Mutual Funds – Online and Offline?

How to invest in Mutual Funds – Online and Offline?

Small investments can create good wealth if you can invest in mutual funds regularly. There are many new investors who are joining and investing in mutual fund schemes every month. While there are offline methods to invest in mutual funds, an online method of investment always score high. How to invest in Direct Mutual Funds online? How to invest in Mutual Funds through third party websites?  Can we still invest in mutual funds through offline mode? This article would help to provide step-by-step guide on how to invest in mutual funds offline and online?

Also Read: Best Mutual Funds that are low risk but provide high returns

What are Mutual Funds?

You can skip this section if you are already familiar with it.

Mutual funds are the professionally managed investment options that pools the money of several investors for further investment in equity/stocks, government securities and other financial investment options. Basically, it is diversification of investment at a fraction of the cost. There are two ways of investing in mutual funds – lump sum and SIP

1) Lump sum is investing the entire amount in a single go.

2) SIP or systematic investment plan in which investment is made in pre-defined installments made at regular intervals like daily, monthly, quarterly, half yearly and yearly. The amount of SIP could be as low as Rs 500 per month.

What are the various types of mutual funds and their risks?

A variety of mutual funds are available to the investors to invest in:

1) Equity mutual fund scheme invests mainly in equity stocks. It is a high-risk investment that is suitable for long term investors as it is expected to give good capital appreciation in the medium to long run. It is Ideal for those investors who have a high risk appetite. Equity funds include, large cap mutual funds, midcap funds, small cap mutual funds etc.,

2) Balanced funds allow investors to enjoy growth and income at regular intervals. Funds are invested in both equities and fixed income securities, the proportion of which is predetermined and disclosed in the scheme-related document. These are ideal for moderately aggressive investors.

3) Debt funds major part of the fund is channeled towards debentures, government securities and other debt instruments. It is basically a medium risk and low return investment, ideal for investors who are looking for a regular, steady and risk-free income. One should note that recent Kotam FMP redemption delays due to Essel Group Crisis have put debt funds as high risk now.

How to invest in Mutual Funds – Online and Offline?

There are two ways of investing in mutual funds i.e. online and offline. In an online investment, there are again few options available. One can directly invest through the website of fund house or can visit third party websites. Mobile apps also provide the facility of investing in Mutual Funds online. Here are few ways to invest in mutual funds either offline or online.

1) How to invest in Direct Mutual Funds Online directly on website of fund house?

Investment in mutual fund can be made directly by visiting the website of mutual fund. The direct plans of Asset Management Companies (AMCs) provide higher returns as compared to regular mutual fund schemes as there is no mediator or agent involved in it and no brokerage is paid to agents. Here is the step-by-step process of investing in mutual Funds Online on the mutual funds website.

Go to the website of the Asset Management Company through their online portals whose mutual fund you want to invest. E.g. if you want to invest in any mutual fund of HDFC, visit HDFC mutual fund.com.

Create your account on the AMC website. While filling the investment section of the online form, do ensure to select the Plan Type as ‘DIRECT’. Select a scheme type and double-check it to avoid any kind of mistake. You also need to fill other details like investment type (lump sum or SIP), mode of payment, bank details etc.

For the current installment, you may choose net banking or NEFT or debit card and for the future installments, you may choose auto debit or bill-pay option.

This makes you reach to the final step of the process which you can review and confirmation. You mat edit things here if you wish.

You will be redirected to the payment gateway of banking website, depending upon the mode of payment. Once the payment is complete, you will be redirected to the website where the confirmation screen can be seen. You can even print this if you wish.

For investing in different AMCs, you have to login to each AMC separately. However, the steps for different AMCs may vary a bit.

For online investment, the KYC compliance can be done online too which is known as e-KYC for which you need to enter your Aadhar Number and Pan Number. It is important to note that through e-KYC process, the investment is restricted to Rs. 50,000 per year per mutual fund for OTP-based e-KYC. If you want to increase the value of an investment, you need to go through the proper KYC method.

The documents required to complete full KYC are:

Aadhar number

Pan Number

Bank details

An image of cancelled cheque with signature

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How to invest in mutual funds online through MF Utility?

MF Utility (MFU) is an innovative “Shared Services” initiative by the Mutual Fund industry under the aegis of Association of Mutual Funds in India (AMFI), which acts as a “Transaction Aggregation Portal” through which a Mutual Fund customer is enabled to transact in multiple schemes across Mutual Funds using a single form/payment.

MF Utility provides browser based access to Mutual Fund customers, with connectivity to Registrars and Transfer Agents (RTA), Banks, Asset Management Companies (AMC), Payment Gateways (PG) and KYC Registration Agencies (KRAs) and enables online transaction submission in multiple schemes across Mutual Funds through a single form/payment. First one need to go to mfuonline.com and register for eCAN / CAN and then do the purchases / redemptions / switches / SIPs for all mutual fund schemes that are participating through MF Utility

How to invest in Mutual Funds online with third party websites?

For investing in different mutual fund schemes directly, one needs to log in at a particular fund house individually, remembering the separate passwords etc. is full of hassles. There are several third party websites like funds India, scripbox, or icicidirect etc. that offer investing in several mutual funds with a single login. They enable the access across multiple mutual funds in single gateway. For investing in mutual funds online through third party website, you need to create an account on the website through which you wish to invest. The following are the steps for the same:

Go to the home page of the concerned website.

Create your new account by entering the required basic details like DOB, mobile number, gender etc. and get yourself registered.

Go to investment in mutual fund page. The investor is prompted to answer certain questions like the purpose of investment, the time horizon, etc. The best part is that these websites suggest you the funds according to your requirement. Select the desired mutual fund to invest.

Comply with the KYC requirements.

Some websites may even ask you to link your bank account with their website.

You will be required to give some more personal details and nominee details.

Submit the form.

In order to prevent yourself from any cyber fraud and crime, do ensure that the website you are looking for is registered with SEBI and has complied with all the statutory requirements.

How to invest in mutual funds online through third party website or Apps like MyCams, Karvy etc?

The websites like MyCams, Karvy are the web based applications created for the comfort of the investors where they can transact in all participating mutual funds that have authorized them to provide designated services with a single login. The steps to invest through these websites are-

Create a new account on the website by filling the questionnaire.

Log in to the website through valid user name id and password.

The list of participating AMCs will be displayed.

Choose the desired mutual fund scheme.

Comply with KYC.

Input more information like investment scheme, dividend option, investment amount, band details etc.

The investor has to upload the cancelled cheque image copy with signature.

By filling all the details, the page will be directed to respective bank log in page. Once the funds are transferred, the transaction is complete and confirmation will display on the screen. 

How to invest in Mutual Funds online through Mobile Apps?

With the explosive use of smart phones, most of the mutual fund companies have even launched their mobile applications in order to facilitate their clients to invest instantly or check their NAVs on the go. Even the third party distributors or agents have launched their apps for their clients where they can check the status of their investments in just a few clicks. For this-

You need to download the particular application in your mobile phone through Google Play Store or Apple iTunes.

You get the icon of the respective mobile app. Log into it using the account credentials.

Complete your KYC.

Select the desired plan and fill in other details.

You will receive an OPT on your mobile number for verification. Once verified, the process is complete.

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How to invest in mutual funds by filling mutual fund form?

It is the conventional mode of investing where you invest in a mutual fund by filling up the form. There are two ways of investing offline, directly with the fund house or through the broker.

For a direct investment with fund house, you need to visit the nearby branch of the fund house along with the necessary documents like address proof, identity proof, a cancelled cheque and a passport size photograph. Fill in the application form of the desired mutual fund and submit together with the documents.

For investing offline, though the broker, you need to search for a mutual fund advisor in your locality and that person will guide you through all the formalities. This method is suitable for the new-bee investors who are not aware of the procedures. It is very time-consuming and full of hassles in the world, where everything is available online today. Offline methods would vanish in coming years.

In order to invest in a mutual fund, the investor needs to comply with the KYC (Know Your Client) requirement. For this, he needs to submit the copies of PAN (permanent account number) card, address proof, age proof as required by the fund house.

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Suresh

How to invest in Mutual Funds – Online and Offline

7 comments

  • Mans Bhatia

    You have missed the most important one – MF UTILITY. It is owned by the Association of Mutual Funds in India, and is the only official Transaction Aggregation Portal to invest in multiple schemes through a single window. It is also the only hassle-free paper-less way if one does not wish to bring another intermediate entity into the picture.

    • Hi Mans, I thought it would get covered under other websites category. Since some of you have expressed this concern, I have added them as seperate note now. Thanks for your valuable comments.

  • Sateesh

    https://www.mfuindia.com/ is also an option and that’s not a third party website as it is owned by the mutual fund industry itself.

  • shrinkforearn

    Good information and idea about mutual funds thanks, keep sharing

  • Balakrishna Mundkur

    Article really gives an insight into financial planning and wealth management.

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