How to invest in mutual funds online in India- Tips

How to invest in mutual funds online

How to invest in a mutual fund is the following step after making the decision to do so. Since SEBI regulates mutual funds, there are a few prerequisites that must be satisfied before you can make an investment. There are numerous ways to invest in mutual funds nowadays. You have a handful of these choices in front of you.

Mutual fund investment strategies

These are a few common ways that people in India invest in mutual funds.

  1. Purchasing MF units straight from the AMC
  2. purchasing MF units through the AMC registrant, such as KFintech or CAMS
  3. Purchasing MF units via a broker and keeping them in a demat account
  4. purchasing via aggregators such as Scripbox, Groww, and Kuvera.

Therefore, you must finish your Know Your Client (KYC) registration even before you begin the investment procedure.

What is E-KYC/KYC and how is it done?

The purpose of the mutual fund KYC is to verify that you are an actual investor. The KYC only needs to be completed once, following which your PAN is used to record the KYC information. If the KYC is finished when you apply for the mutual fund, you can proceed with the investment. In order for SEBI to verify that you are investing from legitimate sources of income, KYC typically entails providing information regarding your evidence of identity, proof of address, and income papers.

In the last many years, e-KYC has grown a lot in popularity. You can complete E-KYC for mutual funds if you have an updated Aadhar card that is connected to your PAN, mobile number, and email address. 

Here, all you have to do is give the fund or distributor permission to access your Aadhar information. You can finish the E-KYC in under an hour. Verification of the individual is required for E-KYC. You can accomplish this by showing up in person for in-person verification (IPV) or by making a video call.

What is mutual fund direct online investing?

The direct mutual fund platform has become a significant and well-liked means of purchasing mutual funds in recent years. Previously, purchasing a mutual fund required an investor to go through a broker or speak with an AMC directly. The investor’s requirement to have a distinct folio for every AMC presented a challenge. This is the reason the procedure is so intricate now.

You will have a total of ten distinct folio numbers assigned by each of these AMCs if you are investing in ten funds through ten different AMCs. Furthermore. You would require ten distinct PINS in order to access the mutual fund account and these folios online. That would be very difficult to handle and very complex. Direct internet mutual fund purchases have been helpful in getting around this headache.

How is direct online investing different from Mutual Fund investing

Actually, not much has changed. The front end interface and the holding method are the only things that change when purchasing mutual funds online. You now have mutual fund units in your demat account rather than in the form of a mutual fund statement. The brokerage platform will first verify that you have activated your mutual fund investing facility and are eligible with your KYC completed before allowing you to purchase mutual fund units online.

The mutual fund is handled in the trading system after the check is finished. Nonetheless, the mutual fund registrant, such as CAMS or KFintech, will still handle the back end processing. The registrar transfers the extra units straight to your demat account after they are produced. When you sell units, the opposite procedure takes place since your bank account is credited and your demat account is debited.

Which investing approach—using an ACM or an online broker—is preferable?

As previously said, you have three options if you choose to purchase funds online. These units are available for purchase directly from the AMC website, through your usual broker, or even via independent portals such as Groww or Kuvera. These benefits and drawbacks will assist you in making an informed choice.

  • Once the initial formalities are finished, you can transact online via the AMC website. Although there are no additional costs for this service from AMCs, you must keep separate PINS and Folios for each AMC. That can be really laborious.
  • Second, the process is easier because you may visit your online broker on your laptop or mobile device. There is already a relationship in existence. 

Is it possible to purchase mutual funds via the BSE Mutual Fund Star platform?

Recall that ordinary investors cannot access the BSE MF STAR platform directly. Only SEBI-registered independent financial advisors, or IFAs, and stock market-authorized brokers are eligible to use them. In order to establish a connection between the funds and the intermediaries, the BSE provides the MF Star platform. You are not able to directly use the Star MF platform as an individual investor.

Nonetheless, you can utilize the MF Star platform to place orders on behalf of your clients if you are a SEBI-registered broker or Independent Financial Advisor (IFA).