Simplified Investing: A Guide To Buying Direct Mutual Funds Online In India

published on: March 22, 2024 last updated on: May 17, 2024
Simplified Investing: A Guide To Buying Direct Mutual Funds Online In India

In 2023, the mutual fund assets under management grew by 19%. This means that investors will have more options for diversification. Mutual funds are one of the ideal investment vehicles with various options suitable for investors with different risk profiles. 

The first question you may have is how to buy direct mutual funds online in India. This blog will give you a step-by-step guide to begin your investment journey.

What Are Direct Mutual Funds?

As you explore mutual fund options, you will find two main types – direct and regular mutual funds. Both these options have the same assets, and the same fund manager will manage them. The difference lies with the expense ratio, which is the processing charges that will be deducted from your returns. 

Direct mutual funds are schemes you can buy directly from the fund house. There is no middleman involved. So, it will have a lower expense ratio. 

Regular mutual funds, on the other hand, involve distributors or agents. They can provide you with personalized financial assistance. You will pay for their service, which will be included in the expense ratio of your fund. The Asset Management Company(AMC) will pay the agents. The expense ratio of regular mutual funds is usually 0.5% to 1% higher than that of direct mutual funds. 

So, why is the expense ratio important? When the expense ratio is higher, your profits will reduce. However, your mutual fund broker or distributor can help you find the right investment option

Step-by-step Guide On How To Buy Direct Mutual Funds Online In India?

All major mutual fund houses in India now provide online options to invest in mutual funds from anytime, anywhere. If you are used to online shopping, you will find that the process is similar for mutual funds. A smartphone only requires a few clicks to invest in an online mutual fund. Check out our blogs to learn about the best app for mutual fund investment.

However, do your research before investing in mutual funds. Know about the fund house and different types of mutual fund options to select a scheme that aligns with your investment horizon, risk profile, and return expectations. As per SEBI guidelines, mutual fund houses must be transparent concerning mutual fund details. You can find all the information on the website beforehand. 

Once you have chosen your investment vehicle as well as the best website for mutual fund investment, follow these steps to get started:

Step 1: Choose the AMC or mutual fund house from which to buy mutual funds. Read the user reviews and ensure that they provide proper customer support. 

Step 2: Now, create an account with the AMC to invest in mutual funds. The online application form requires you to enter all the basic details such as name, mobile number, email address, bank details, etc. 

Step 3: Select the mutual fund scheme of your choice. To invest in direct mutual funds, choose Direct. Again, you have to choose between Dividend and Growth. With the Dividend option, the AMC will decide to pay dividends on your investment from time to time. The AMC will determine the frequency and payout. With the growth option, the dividend will be reinvested in the scheme to increase your investment. 

Step 4: Input investment details. Choose lump-sum or SIP investment. Select whether you want demat or non-demat mode. Then, enter the mode of payment for investing your money.

Enter your bank details to transfer money from your bank account to your mutual fund investment account. 

Step 5: The next step is KYC verification of account details. You must upload your PAN card, aadhaar card, etc., as your ATP requested. Your application will often be validated through OTP sent to your mobile phone. 

Step 6: Once KYC verification is complete, pay to buy mutual fund shares. After completing the process, you will receive messages on your registered mobile number and email address. Then, you will be awarded a folio number, which you can use to track your mutual fund investment at any time. 

For mutual fund investments, a demat account is not mandatory. However, if you have a Demat account, choose the Demat mode option while registering to hold your mutual fund securities in the Demat account. 

Also, you can invest in multiple mutual fund schemes using a single account with an AMC. Your account dashboard will show your investments and performance. 

You can do so if you prefer to invest in multiple mutual fund schemes with different AMCs. 

When you handle multiple investments, creating a Demat account will help you track all your investments using a single account. 

Conclusion 

Go for direct mutual funds to maximize profits from your mutual fund investments. With this option, you have to track and manage your investment independently. The online account makes it easy for beginners to manage their mutual fund investments independently.

Figure out which is the best app to invest in mutual funds for yourself. Managing your mutual fund account is very similar to your bank account. You can withdraw funds based on the scheme policies. 

FAQs

  1. Do I need a demat account to invest in mutual funds?

No, a demat account is not essential for investing in mutual funds. You can use your login details to check the performance of your investment. However, if you invest in multiple schemes, your demat account will provide a safe repository to hold all your investments. 

2. How can I check the mutual fund status?

You can contact them to know your status if you have purchased mutual funds through a distributor. Buying mutual funds online allows you to log in to your account anytime to check your investment status. 

3. What is a folio number?

The folio number for a mutual fund investment is similar to a bank account. You can track your mutual fund investment using the folio number. Apart from the website, you can download the mobile app of the fund house or call the customer care number to get relevant details.

Read More : 

1. Six Investments Every Family Should Think About

2. Basic Tips for Making New Investments in Real Estate

3. Why are Real Estate Investments the Smartest Ones

Mony Shah

With an adept skill of curating content on multiple genres, Mony has harnessed success as a Content Writer quickly. Find her sharing profound thoughts and opinions on finance, insurance and lifestyle niches.

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Elbert Clark

26 March, 2024

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