If you’re not sure where to invest your money, invest in mutual funds online in India. Mutual funds in India are a wonderful place to grow your money. They make it simple to get profit while avoiding risk.
You must understand how to invest in mutual funds online in India when you want to buy one. In this article, we’ve covered how to invest in mutual funds online in India. It is one of the greatest investment options because it provides a variety of possibilities that may be able to meet the needs of every investor, regardless of their financial investing goals or risk tolerance. Let’s start and learn to invest in mutual funds.
What is a Mutual Fund?
A mutual fund is a collection of funds that are professionally managed by a fund manager. A trust that spends money in stocks, bonds, money market instruments, and/or other securities after collecting funds from several participants who have similar investing goals. You can buy mutual funds directly from a fund provider, all the way through an investment business, or an online brokerage. These are the three most popular ways to purchase a mutual fund online. Let’s learn to invest in mutual funds and get the most benefits from them to secure financial objectives. We will also learn how to invest in mutual funds online in India.
Types of Mutual Funds
Let’s look at the different types of mutual fund investments and learn to invest in mutual funds wisely by choosing which mutual fund suits your monetary goals.
1. Growth or Equity Schemes
Mutual funds that invest primarily in securities and other investments related to stocks are called growth funds. Capital appreciation is the Growth funds’ main goal. Growth funds have large returns over the long run because they are risky.
2. Liquid Mutual Funds
The goal of liquid funds is to give investors access to very short-term liquidity. The least risky investment is a liquid fund, which offers average returns just above deposits in banks. For those wishing to store extra cash until they find an appropriate investment opportunity, liquid funds are great for investing in mutual funds online in India.
3. Balance Fund
Equities and debt instruments are both invested in as balanced funds. Investors in these products can look forward to both consistent income and growth. For individuals who are prepared to take modest risks over the long or medium term, this plan offers a sensible investment option.
4. Tax-saving Funds
Tax-saving funds are an option for everyone who wants to increase their capital while simultaneously reducing their tax liability. Tax saving funds, commonly referred to as equity-linked savings programs, allow investors to take advantage of tax rebates under Section 80C of the Income Tax Act of 1961.
5. Exchange-traded funds (ETFs)
An ETF is a type of investment that trades on the stock market and holds a variety of assets, including bonds, gold bars, oil futures, foreign currency, and so on. It provides the flexibility of buying and selling shares at any time of day in stock markets.
6. Open-ended Schemes
An open-ended plan allows investors to participate and depart at their own pace because shares are continuously bought and sold. The Net Asset Value (NAV) serves as the basis for both the purchase and sale of funds.
7. Closed-ended Schemes
These types of schemes have a fixed unit capital and a limited number of units to sell. An investor in a closed-ended scheme is unable to purchase units after the New Fund Offer (NFO) has finished, making it impossible for them to withdraw their money before the period has run its course.
Costs Associated With Investing in Mutual Funds
While learning how to invest in mutual funds online in India it becomes important to know the cost of it. The fund equity is determined using the Net Asset Value (NAV), which is the portfolio’s value after expenditures get deducted. The AMC computes this cost at the end of each business day.
Your administration fee from AMCs will go toward paying for their earnings, brokerage fees, advertising, and other administrative costs. An expense ratio is typically used to measure this. The expense ratio determines how much it will cost to invest in an assured mutual fund.
If you are not familiar with the related cost of investment in mutual funds, you could find yourself in a scenario where your investment’s returns are significantly reduced because of overhead expenses. To learn to invest in mutual funds you have to know about the costs and fees of mutual funds. Reviewing the fine print before signing anything is a good idea.
Keep this in Mind Before Investing in Mutual Funds Online in India
Certain factors are important to consider before you want to know how to invest in mutual funds online in India. By doing this, you’ll be better able to select the best investment plan and build money over time.
Identify Your Investment Goals
The first step in investing in a mutual fund is to decide your investment goal. You must specify your investing goals, which may include retirement, a child’s schooling, a wedding, etc. If you don’t have a clear aim, you need at least to know how much wealth you would like to accumulate and over what period. Choosing an investment goal aids the investor in focusing on the available investment possibilities based on risk level, payment method, lock-in duration, etc. This is one of the good ways to learn to invest in mutual funds.
Know Your Customer (KYC) Requirements
While knowing how to invest in Mutual funds Online in India, Investors have to stick to the KYC standards to make investments. The investor wants to provide copies of their Permanent Account Number (PAN) card, evidence of residency, age verification, and other documents as mandatory by the fund manager.
Learn About the Available Schemes
The market for investing in mutual funds is oversaturated with choices. Make sure you have done your research by examining the market to understand the different kinds of available plans before investing in mutual funds online in India. Once you’ve done that, consider your investment objective, risk tolerance, and affordability to determine what works best for you. If you’re unsure of what kind of investment approach to choose, seek the advice of a financial expert. You must make sure your money should give you the greatest amount of profit.
Think About the Risk Factors
Keep in mind that there are risks associated with investing in mutual funds. So while knowing how to invest in mutual funds online in India think about the risk factors wisely. Plans with large profits frequently come with high risks. You can invest in equity programs if you have a high-risk tolerance and yearn for high returns. On the other hand, debt plans are an option if you don’t want to risk your money and are happy with modest returns.
You can learn to invest in mutual funds once you have determined your financial goals, completed the KYC requirements, and looked at the various schemes.
Process How to Invest in Mutual Funds Online in India?
Before you learn how to invest in mutual funds online in India and start investment, you must complete a few simple formalities because SEBI governs mutual funds. There are many ways to invest in mutual funds nowadays. Let’s look at the 5 steps by which you can know easily how to invest in mutual funds online in India.
- Know your risk tolerance and risk ability. Risk profiling is the process of determining the level of risk you are willing to accept.
- Asset allocation is the next step to follow. After determining your risk tolerance, you need to find and fix tour funds in different asset classes. To balance the risk in the market your assets should ideally include both debt and equity vehicles.
- The next step is to determine which funds you have invested in each asset class. Based on investing objectives and past performance, you can compare mutual funds.
- Select the mutual fund schemes in which you will invest and submit your application either online.
- To guarantee that you get the most out of your investment, knowing updates and investment diversification are essential.
Various Ways to Invest in Mutual Funds
Different methods are available for making mutual fund investments. They include:
1. Offline Investment Directly With the Fund House
You can invest in mutual fund schemes by visiting the nearest branch office of the fund house. The documents required are:
- Proof of Address
- Proof of Identity
- Canceled Cheque Leaf
- Passport Size photograph
The fund house will provide you with an application form to complete and submit and the necessary documents.
2. Offline Investment Through a Broker
A mutual fund broker or distributor can guide you through investment. They will provide information about various schemes and required documents. Additionally, they may offer suggestions on suitable schemes. A fee will be charged for their services, deducted from the total investment amount.
3. Online Through the Official Website
Most fund houses offer online facilities for investing in mutual funds. You can visit the fund house’s official website and follow the instructions. The KYC process can also be completed online (e-KYC) by entering your Aadhar number and PAN. After verification, you can start investing. The online process is quick, easy, and preferred by many investors.
4. Through a Mobile App
Several fund houses allow investors to make investments through dedicated mobile apps. By downloading the app on your mobile device, you can invest in mutual fund schemes, buy or sell units, view account statements, and access other details related to your folio. Some well-known fund houses with investment apps include SBI Mutual Fund, Axis Mutual Fund, ICICI Prudential Mutual Fund, Aditya Birla SunLife Mutual Funds, and HDFC Mutual Funds. Additionally, apps like myCAMS and Karvy allow investors to manage investments from multiple fund houses on a single platform.
Why Should You Invest in Mutual Funds?
As mentioned earlier, mutual funds are professionally managed investment vehicles that aim to grow your money over the long term. They offer the opportunity to invest in various instruments such as equity, debt, money market, and more, which can generate favorable returns on your investment. Below, we have mentioned the top reasons why investing in mutual funds:
Mutual funds are entrusted to skilled fund managers who diligently research and monitor the markets. They identify promising stocks and make buy-and-sell decisions to generate favorable returns on your investment. You can find detailed information about the fund manager’s credentials and performance in the scheme information document (SID), giving you confidence that your money is in capable hands.
Compared to traditional term deposits like Fixed Deposits (FDs) and Recurring Deposits (RDs), mutual funds offer potentially higher returns by investing in a diverse range of instruments. Equity mutual funds present an opportunity for superior returns. However, these are higher-risk plans, suitable for investors with a higher risk appetite. Debt funds, on the other hand, offer lower risk and better returns than term deposits.
By investing in multiple asset classes and stocks, mutual funds reduce risk by spreading the portfolio’s exposure. This ensures that even if one asset or stock underperforms, others can balance it, potentially leading to favorable returns. For further risk reduction, you can diversify your portfolio across different types of mutual funds with the assistance of a financial advisor.
Investing in mutual funds has become quick and hassle-free due to the online facilities offered by many fund houses. You can invest in a mutual fund scheme with just a few clicks. The KYC process is available online, and investors can use the e-KYC facility for investments up to Rs. 50,000. For investments exceeding this amount, physical KYC completion is necessary.
Mutual fund investments can start from Rs. 5,000 (lump sum) or Rs. 500 for a monthly Systematic Investment Plan (SIP). This makes it possible to begin investing without waiting to accumulate a large sum. Opting for the Direct Plan of a mutual fund scheme allows you to avoid paying additional commissions to distributors or agents.
Mutual funds offer a Systematic Investment Plan (SIP) to foster a habit of regular investing. With a SIP, you can invest small amounts at regular intervals like weekly, monthly, or quarterly. The auto-debit facility deducts the fixed sum automatically from your bank account each month, making regular investing seamless and hassle-free.
You must have known How to invest in mutual funds in India. You should follow all the guides and start investing today in mutual funds. Investors can ensure an ongoing source of income with the help of investment. For retirees and elderly people, mutual funds in India are the best option because they provide dividend and interest income by investing in debt securities and other lower-risk assets.
Always seek financial experts if you are confused about learn investing in mutual funds. They will help you to choose the best way to invest in mutual funds online in India.
How to Invest in Mutual Funds Online in India – FAQ
What are mutual funds?
Ans. A mutual fund is a collection of funds that are professionally managed by a fund manager. A trust that spends money in stocks, bonds, money market instruments, and/or other securities after collecting funds from several participants who have similar investing goals.
How to invest in mutual funds online in India easily?
Ans. If your KYC is complete, you can invest directly in a mutual fund online. You can invest in a fund by going to the nearest bank if you feel uncertain about making a transaction online. The most practical way to invest directly in Mutual Fund schemes is online, where you may also save money on commissions.
Does the BSE Mutual Fund Star platform allow me to purchase mutual funds?
Ans. Keep in mind BSE MF STAR platform is exclusively accessible to SEBI-registered independent financial advisors, or IFAs, and registered stock exchange brokers. To establish a connection between the funds and the intermediaries, the BSE provides the MF Star platform. You cannot directly access the Star MF platform as an individual investor.
How can I purchase mutual funds without hiring a broker?
Ans. Through the official websites of the appropriate mutual funds, online stock exchange platforms, Mutual Funds Utility (MFU), or other different online platforms, you may invest in a Direct Plan. A few online sites also provide the ability to invest in Direct Plans.
How can I Buy Mutual Funds in India?
Ans. You can buy mutual funds directly from a fund provider, through an investment business, or an online brokerage. These are the three most popular ways to purchase a mutual fund online.