How to open a mutual fund account online in India?
If you are a new investor in mutual funds or young investor who has not yet invested in mutual funds, first think it comes to your mind is how to open mutual fund account in India to buy mutual funds. There were several queries from readers on this blog to indicate the process to open MF account online in India so that they start investing in MF’s, hence I thought of writing an article on this topic. This article describes about the various ways of opening the mutual fund account online and relevant transaction charges charged by MF brokers. This would help you to choose the right way of investing mutual funds.
How to open a mutual fund account online in India?
a) Open account directly with AMC websites and do the MF transactions: This is probably looking simple, but little complex way. You need to register at AMC websites to do mutual fund transactions. Below is the process of registering at AMC website.
- Visit the mutual fund house website (e.g. hdfcfund or iciciprufund.com)
- Choose the option “Invest online”
- Download the mutual fund investment application form
- Fill the personal and investment details
- Enclose cheque or DD for the amount you want to invest
- Enclosed KYC (Know your customer) acknowledgement document. If you have not submitted KYC document earlier, then
- Download the KYC form
- Enclose proof of identify, proof of address, PAN card and 2 passport photographs
- Send the all the relevant documents to mutual fund customer care address specified on application form.
- Mutual fund customer care would review and process your application form and would send you mutual fund receipt after allotment of mutual fund units. Now you have become the existing customer for the mutual fund house. After this, you would be able to invest in direct mutual funds online.
- You will be assigned and given a Personal Identification Number (PIN) which can be used to do more transactions in future.
The above process would differ from AMC house to AMC house, but the above would give a fair idea on what is required.
- Simple process where you can go online and complete the registration
- You can buy mutual funds online by visiting the AMC website
- There are no transaction fees payable to MF house or any other agent
- Your mutual fund returns would be higher as you are investing in mutual funds directly compared to regular plans as there are no fees payable to agents.
- You need to do all formalities on your own
- If you want to invest in various mutual funds across mutual fund AMC schemes, you need to register at every mutual fund AMC website. E.g. if you want to invest in say 8 mutual fund houses schemes, you need to complete KYC and all other formalities for 8 times and you need to remember 8 different PIN’s to do transactions.
b) Open a demat account with large brokers:
All stock brokers are linked to NSE and BSE mutual fund platform. You can open demat account with any of the large brokers in India. However, one demat account is sufficient for stocks and mutual funds. Here is the process
- Apply for demat account with any broker like ICICI Direct.com etc.
- You need to pay account opening charges of Rs 100 to Rs 750 depending on the broker you choose
- You need to pay annual maintenance charges of Rs 200 to Rs 500 depending on the broker
- Fill the application form
- Attach cheque (account opening fees) and PAN copy along with KYC (Know your customer) form and give it to the broker or send it through courier to broker address
- You would receive a login ID and password for the transaction through courier. A few brokers offer online ID and password generation.
- You can buy mutual funds in SIP or a lump sum in any mutual fund scheme
- There would be transaction fees to buy mutual funds on SIP. E.g. in ICICI direct.com you need to pay Rs 30 or 1.5% of the transaction value whichever is less as transaction charges.
- There would be transaction fees to buy mutual funds in a lump sum. E.g. in ICICI direct.com you need to pay Rs 100 flat fee for any lump sum mutual fund transactions.
- You can open one account with such brokers and have a single login for your stocks, mutual fund, bonds etc.
- Tension free as all your investments are at one place
- Good for long term investors as such large brokers are trustworthy.
- High transaction charges
- It is not convenient for short term traders as such transaction charges would eat away their profits
c) Open a mutual fund account with any mutual fund independent portals
Apart from above, there is another way to open mutual fund account is to open account with independent portals run by a few companies like Fundsindia.com or Fundsupermart.com. These portals differentiate themselves from others by not charging any transaction charges and provide special analysis on mutual fund schemes. Here is the process to open MF account with such independent portals.
- Visit their website (fundsindia.com or fundsupermart.com)
- Fill account opening form online
- Take print and attach PAN copy and KYC form and send them by courier.
- You would get necessary login and password to do mutual fund transactions.
- The unique feature of these independent portals is they do not charge any transaction fees for either buying or selling the mutual fund units. Means if you invest with fundsindia.com as an example there would be zero cost on transactions. To this extent you would save money by opening account with them. Now you would get doubt as to how they survive if they do not charge any transaction charges. Their source of income is Trial fees which are paid by mutual fund houses directly to such independent portals.
- The other unique feature is such portals would provide good analysis on mutual funds. Of course you would get such analysis on our best investments blog and several other good websites like valueresearchonline.com.
- Zero transaction charges
- Good analysis of mutual fund schemes where you can take a call and invest
- Investors still not able to gain confidence with such independent portals. These have been in existence in last 4-5 years only. I still get mails and comments on this blog whether they are trustworthy or not. I feel it may take a few more years for such portals to gain high confidence.
Conclusion: Personally, I have a mutual fund account with ICICIdirect.com where I wanted all my investments to be tracked in one place. Apart from mutual fund account, I felt investing in stocks, tax free bonds, NCD’s etc. were made easy on ICICIdirect.com. However the transaction charges are very high. This is the major negative point which I observed. Independent portals offering mutual fund account are also good as they do not have transaction charges. However, even they do suffer from a few negative points. Consider the positives and negatives and open mutual fund account that suits you better.
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How to open a mutual fund account online in India
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