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.
Positive points
- 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.
Negative points
- 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.
Positive points
- 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.
Negative points
- 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.
Positive points
- Zero transaction charges
- Good analysis of mutual fund schemes where you can take a call and invest
Negative points
- 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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Suresh
How to open a mutual fund account online in India
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i want mutual account joint in icici bank can you help me
How about MFUI Online for investing in mutual funds of different AMC / Fundhouses under one platform. What are the Pros and Cons.
can I open mutual fund account using apps like grow app, hdfc securities app to invest. apps which has no charges to open account, is it trustable?
Hello Maria, HDFC Securities is part of HDFC group. This way you need to check whether such companies are sustainable for long term and then go for investments through them. You can check mycams app / portal where many investors are preferring.
what are mutual fund houses?
like Sharekhan or Motilal oswal funds?
I feel direct mutual fund is the winner in the long run and to be done through AMC website easily.
I agree Suman
R, sir/madam
I want to open Demat/mutual funds account so please give me queries how to invest them per month
9872688912
Hi , all
I Need to open MF account
Regards
Hi all I need mutual fund account
Hi
I need to ioen mutual fund account:
Regards
I need mutual fund account
i m new user i want to open account on line account..can i open one account for different fund house?
so good
Dear Suresh,
It’s really informative article. Thanks.
I want to invest in MF through Demat. so for monthly SIP do i need to pay transaction charges every month?
Nishant, transaction charges would depends on your broker who is offering demat account. Pls check with your broker about this.
Hi,
Can I have two mutual fund accounts with two brokers like fundsindia and myuniverse ?
Yes. You can invest in as many MFaccounts as you want.
say if i buy 10 shares of 100 each with a long term perspective of 3 yrs (delivery) and the stock goes down say to 90 next day, will i have to pay the exchange money at the settlement day…..or it is when i sell my shares after 3 years will i get paid in case of loss/profit?
SORRY I KNOW I AM ASKING RANDOMLY, but i have not been able to get a reply on internet
Hi Suresh,
Thanks for providing this information.Its very informative.However i have some queries:
1.I have read somewhere that if you tick the direct option in the form at the time of applying for that fund, this will be considered as direct.No charges will be levied by broker or independent poratl after that.How true is that?
2.AMC also offers fund of other fund houses(For example hdfc offers all other mutual fund also).If we buy any othe fund through HDFC (For exapmle reliance) , would they charge any brokerage for such transaction?
No Ajay. If you want to apply thru direct option you should visit AMC website (like HDFCMF OR ICICI MF) and download the form. This does not contain any broker code. If there is any broker code in any application, it is NOT direct. 2) They do not charge any transaction charges + no trial fees which they would pay mf broker
Also let me know if it is safe to get a account with fund supermart.com/funds india.com.Will they take any service charges after opening account with them during the due course.or will they demand to invest in that/this particular MF scheme without our interest.
They do not charge any transaction charges
Dear suresh ji,
I am a first time investor in MF and want to start SIP for atleast 3 yrs from now with more returns and medium risk.After going through some of the answers you replied to earlier questions by investors,I fixed to keep HDFC Midcap as my 1st priority.Please let me choose the other,whether Large cap is suitable or not?I can invest 4KPM in two schemes.Please give me three good options from which I will choose one as the second priority after HDFC.
Awaiting you….
Invest in these funds. 1) Large cap – HDFC Top-200 / ICICI Pru focussed blue chip fund 2) Mid-cap – HDFC Mid-cap opps fund / Franklin India smaller co’s / SBI Midcap fund 3) Balanced – You can check HDFC Prudence / ICICI Balanced fund.
Hi,
I have opened an account in fundsindia.com..But i have not start Investment ..Can i got for Long term with Fundsindia.com..
Is it safe …or not /..Please suggest me..
There are thousands of investors investing thru this. I feel this is safe option.
Hello Suresh
Currently I am staying in USA. Is it possible for me to open any type of Mutual Fund account from here? I have planned to invest in 5 to 6 MFs through SIP option for long term.
I want to start investing immediately but I cannot go to India in the near future also. Please give me any good suggestion.
Several mutual fund brokers are offeirng this. You can try ICICIDirect.com or fundsindia.com
Hi, I have recently visited CAMS service center to complete KYC formalities and invested through them in Birla SL and Franklin mutual fund. On the form, I mentioned direct mode for investment. But my question, if it is really a direct mode of investment. Because I have not really made investment through AMC directly. OR do they get also trial fees like fundsindia. kindly let me know. Regards Anupam
Anupam, CAMS Service centre is only a mutual fund aggregation centre and not broker. You should be going through AMC website to invest in direct plans. There is no alternative mode. Please check the process I indicated to invest onliine on AMC website.
Thanks for your nice article, can I apply MF direct plan using independent portal ?
Thanks,
Shashank
No Shashank, Independent portals offer only regular plans as they need to get trial fees. In direct plans, you need to go directly through AMC websites and there is no fees paid to any agent. Your returns would increase by 0.5% to 1% per annum with direct plans.
Read with interest your article on applying online.
Somehow I dont like the feeling of doing it online.I had taken sips for 3-4 mutual funds last year. I approached SBI who filled in the necessary forms .But they were reluctant to do it.I dont thnk they will oblige if i want to take more MFs in future. Many MF houses dont have a branch in my city.So how do I open a sip-if i dont wish to do it online?
Thankyou
I agree Sateesh. These are some of the pain points. In such case go and open an account with any mutual fund broker or thru independent portal.
You can download the forms from AMC websites for the choosen schemes and fill it offline and submit the same to POSs or AMCs directly. Most of the cities have POS centers. BTW, where are you from?
With regards to Option 1:
a. We need to go to MF office or POS center to complete the KYC formalities. Personal appearance of the investor is mandatory for first time investors as per SEBI regulations.
b. It is not required to visit every fund house for future investments to complete the KYC formalities. It is a one time process. Once we are done we are KYC verified.
c. The investors can do KYC on any POS centers (CAMS/Karvy) prior investing on any MF house.
With regards to Option 3:
a. Even though we maintain the a/c with FundsInda or other private portals, our investments are made to MF houses and we can redeem our investments without their knowledge if required.
b. Even if these portals are closed some day, our investments are safe with AMC.
c. We need to verify our every investments are invested correctly in choosen AMC only. Once we invested using these portals, for safer side, we can goto AMC websites or CAMS/Karvy websites and generate the account statements and can verify our investments. (please note that, it may take two or three days to get our investments reflected in our a/c statements)
I personally use option 1 and option 3 for MF investments. I use scripbox.com for option 3. So far everything seems to be good.
Whoever chooses option 3, make sure you read and understand the documents you sign completely.
Wonderful comments Sriram. You have provided your practical experiences. Thanks once again…
If anyone wants to invest in direct plans than invest directly with AMC.
Hi Bhavesh, There is only one way to invest in direct plans is to go through AMC directly.