Mutual Fund investment may seem as complicated thing to do. Truth is, it is now quite easy to buy mutual funds online in India.
To buy mutual funds online in India, you just need to be careful about few simple but important steps. These steps are related to — choosing the right platform, completing KYC, investing in right kind of scheme (direct) & proper route of investing.
By the end of this guide, you will be able to complete these steps and be ready to make your first investment in mutual funds.
Also please read these articles before buying mutual funds online on your own:
Steps to buy mutual funds online in India
Before you plan to buy your first unit of mutual fund online, there are few steps you need to complete. Most of these steps are one time effort only.
Once these steps are done, then only task that needs to be done is to monitor your investmetns time to time.
Know Your Client (KYC)
One of the most imporant steps, before you start investing in mutual funds online is to get your KYC done.
As per SEBI guidelines, you need to get your KYC done before investing. KYC helps in verifying the identity of investor. It also eliminates the duplication across intermediaries.
It also makes online investing easy and efficient.
There are two ways of getting your KYC done these days:
- Aadhar based
- Non-Aadhar based
If you have Aadhar number, then you can get your KYC done within 10-15 minutes. This is OTP based service that is nearly used by all the platforms mentioned below.
If you don’t wish to use aadhar, then you can simply upload the below mentioned documents to the website and KYC will be done within stipulated time.
List of Documents required
For KYC you need following set of documents. You need to upload them to the AMC website or mutual fund investing app.
- PAN CARD
- Proof of Identity (Aadhar card, Driving License, Voter ID, etc.)
- Address Proof
- Passport Size photographs.
Choosing the right platform
You can buy mutual funds online in India from two places – AMC website and mutal fund investing apps.
In this case you can directly go to an AMC website, create account, complete your KYC and invest into the scheme.
You can find the list of AMC (Asset Management Company) in India from AMFI website. You need to know the fund that you want to invest into and to the website of that fund’s AMC.
Once you have created account, completed your KYC by uploading your documents, you are alloted a portfolio number.
Whatever funds you buy under that AMC are alloted to that portfolio number.
The problem with this approach is that you need to repeat these steps with every AMC where you plan to buy mutual funds online.
There are many good quality free (for now) mutual fund investing apps and websites like Coin, Groww and ETMoney.
You can pick anyone of them, they are all good. I use coin (aff link) and it serves the purpose very well.
The benefit of using an app is that you get a single platform to invest and manage all your units. There is no need to go to individual AMC website to register and buy mutual funds separately.
The real benefit of buying mutual funds online is to buy direct plan of mutual funds with ease.
When you invest through direct plan of the scheme, you immediately save 1% over regular fund due to difference in their expense ratio.
Lump sum or SIP
Once you have completed the steps to being your investments in mutual funds online, the next big question is to invest in lump sum amount or set up an SIP?
In short, the right choice is — set up an SIP.
Even if you have lump sum amount, just divide it across few categories so that you have proper diversification.
Benefits of buying mutual funds online
When you invest in Mutual funds online, you have multiple benefits:
- Access to your complete portfolio on your mobile
- Easy management for taxation purposes
- Increasing or decreasing the SIP amount without paperwork
- No fear of losing your physical documents.
- Access to expert advice from your app/website.
If you are a beginner in investing, then the best idea is to to invest using independent mutual funds investing apps. They provide ease of use, fast KYC and very userfreindly interface.
If you already have a broking/trading account then your KYC is already done. You can check with your broker if they provide mutual fund buying facility.
Here are few more important things you need to take care of when you buy mutual funds online:
- Invest through direct route. When you are buying mutual funds online, then you are already doing all the heavy lifting of paperwork.
- Start slow and with small amount. Once you are comfortable with the process, then you can always increase the investment and also diversfy among funds.
- Invest in SIP. Lumpsum investments should be avoid till you have gained experience about the market and investments.