Mutual funds are the vehicles for the pooled investment where asset management companies raise capital from different investors including individuals and institutions. While investing in mutual funds can be beneficial for you, it is essential to consider a few important things to make your mutual fund investments work. In this article, we will see how to invest in mutual funds online.
How to Invest in Mutual Funds Online?
Investing in mutual funds online helps you save on the brokerage and commission charges compared to offline investing through a broker. You have the independence to choose your scheme. However, if you are not sure of the schemes that would be beneficial for you, it is advisable to take expert advice when making such decisions.
A financial expert could help you by suggesting customized investment plans that would be in line with your financial standing, goals, investment horizon, age, appetite for risk, financial dependents, and expectations from your investment.
Take a step beyond saving, let your money earn for you by starting your mutual fund investment journey under expert guidance.
Many of us do not know how to invest in mutual funds online but no worries as most of the fund houses provide the facility to invest in mutual funds online. To know how to invest in mutual funds online you need to visit the official website of the fund house and follow all the given instructions. You can fill in the KYC details online (e-KYC) and provide the Aadhar details and PAN number online. The provided information is verified and after the successful verification, you can start to invest in mutual funds online.
You can also invest in mutual funds online with the help of an application. These applications are provided by the fund houses and can be downloaded on your mobile. Through these applications, you can invest in mutual funds online with just a few clicks. You can also purchase and sell a unit, check account statements, and other information related to your account.
There are many fund houses that allow investors to invest in mutual funds online via apps. Some of these are SBI Mutual Funds, HDFC Mutual funds, ICICI Prudential Mutual fund, Axis Mutual Fund, and Aditya Birla Sun Life Mutual Fund, etc. Some of the applications which allow you to manage and invest in mutual funds online are myCAMS, Karvy.
How to Invest in Mutual Funds Online – 5 Simple Steps
If you want to know how to invest in Mutual funds online, here are 5 simple steps that will make your work easy and quick:
1. Risk Tolerance- Calculate how much risk you can take which is also called risk profiling.
2. Asset Allocation- Divide your Money among different classes. These should be a mix of equity and debt instruments which will help balance out the risks.
3. Identify the suitable Fund scheme- Now, identify the funds to invest in each class by comparing them on investment objectives and past performances.
4. Make an application- Decide which mutual fund suits you the best and make an application for the same online.
5. Diversify the investment and follow up- These are important to get the best outcome of your investment.
Factors to Consider before Investing in Mutual Funds
For understanding how to invest in mutual funds online, you must consider some of the important factors before investing in mutual funds. The factors are listed below:
1. What is your purpose for investing in mutual funds?
Define your financial goal first. It can be buying a house, self-education, children’s education, marriage, retirement, donation, etc.
2. What amount would you require to achieve that goal?
It is important to quantify the goal in terms of the amount you would require after a certain period. You can have multiple goals, and thus, you need to decide the amount for each goal.
3. What is your risk appetite?
Risk refers to the probability that you would receive a negative return, or your principal amount might be affected. So, risk appetite refers to how much loss you can bear. Therefore, it is better to assess the level of risk you can take before investing in mutual funds.
4. Choose the right fund
Risk and return go hand in hand. If you are an investor with a high-risk appetite, you can choose an equity mutual fund. If you have a lower appetite for risk, you can choose debt funds. Investors with moderate risk can choose a hybrid investment plan.
How to Invest in Mutual Funds – Details
Before you invest in mutual funds, there are few points that you should take care of which will help you to choose wisely and invest smartly. Let’s learn how to invest in mutual funds online in detail:
1. Getting a Purpose for Investment
If you are new and want to invest in Mutual Funds Online, you need a well-defined purpose for it. It can be anything important to you from buying a house to the education of your child. If you do not have any specific goal then you should have clarity on the amount you want to save within a limited time frame.
With clarity on your goals, you can analyze the investment instruments, the risk factor, payment instruments, and the lock-in period.
2. Complete the “know your customer” Requirements
To invest in mutual funds online, the investor has to fulfill the requirements asked in the KYC. For it, one needs to provide photocopies of one’s permanent account number (PAN card) details, residence proof, age proof, etc. These requirements are asked by the Fund house.
3. Explore the Most Suitable Scheme
If you do not know how to invest in mutual funds in India, then you need to make sure that you explore every scheme related to mutual funds. Many schemes are available to cater to the needs of the investor. However, to invest in mutual funds you need a detailed study of the market. After the detailed information you gather on how to invest in mutual funds in India, you need to check the most suitable scheme that qualifies your criteria and needs.
If you still become dubious on how to invest in mutual funds in India then you can take the help of a financial advisor.
4. Calculate the Risk Factor
Mutual funds investments come with a set of risk factors that is why it is important to have a thorough knowledge on how to invest in mutual funds online. The mutual funds with high returns may be accompanied by higher risk factors. If you want to take more risk and want to yield higher returns then you can also invest in equity schemes. However, if you do not wish to go for high-risk factors and are satisfied with the moderate returns then you can choose to invest in the debt scheme.
5. Growth and Dividend
If you do not know how to invest in mutual funds in India then you need to know these two things before making any investment. You have two options to invest in Mutual funds; the first one is Growth, in this option the dividend will be reinvested in the mutual funds. This can help you in earning additional funds through mutual funds whereas the dividend can be useful for you to have a reliable income source through Mutual funds.
Different Ways Invest in Mutual funds
While finding the answer to how to invest in mutual funds online, you will find many ways to invest in Mutual funds. You choose any one of these according to your comfort.
Let us have a look:
1. Offline Investment – With the Fund House Directly
If you want to invest in Mutual funds, you can visit the nearest fund house branch office where you need to fill an application form and submit the following documents:
- Address proof
- Identity Proof
- Canceled cheque
- Photograph (Passport size)
2. Offline Investment – Through a Broker
If you are unable to do the process alone, you can take the help of a mutual fund broker. He will help you to carry out the entire process smoothly. He will also guide you while choosing the mutual fund scheme by telling you their features and documents required etc. He will charge some amount as fees for his services. The amount will be deducted from the total investment amount.
3. Online Investment – Thorugh Official Website
The official website contains all the necessary information for investing in mutual funds. You just need to follow the instructions, fill in the information, and submit the form. The KYC can also be done online by entering your Aadhar Number and PAN. After the verification is done, You can start your investment journey. This is an easy and quick process.
4. Online Investment – Using the App
Fund houses also allow the investors to use App which can be downloaded easily on mobile phones. Here, they can buy or sell units, view their account details, etc. Some of the Apps are SBI Mutual Fund, Axis Mutual Fund, ICICI Prudential Mutual Fund, etc.
Why should You Invest in Mutual Funds?
If you are interested in questions like how to invest in mutual funds in India and why to invest in mutual funds, we have the answers for you. The following reasons are important for you to check the importance of Mutual funds in India:
1. Managed by Professionals
Mutual funds are managed by professionals who do thorough research and keep an eye on the market. They buy and sell the right stocks at the right time to gain more benefits.
2. High Returns
Mutual funds offer a high yield on capital/Fund. Although there are some risks involved sometimes, the returns are higher than any traditional investment instrument.
3. Diverse Options
The option to diversity your investment is great for risk management. If one asset is not performing well, the other asset can cover up the losses and you can enjoy the profits.
Many fund houses have made the mutual fund investment hassle-free and quick by introducing online methods. Even the KYC can also be done online easily.
5. Start small
There is no need to accumulate a huge amount and invest it all in a mutual fund. You can even invest with as low amount as INR 500 to invest in Mutual Funds and that can still benefit you.
SIP (Systematic Investment Plan) can cultivate a habit of regular investment which allows investors to invest small amounts at regular intervals. The Auto debit facility is also available in SIP.
How to Invest in Mutual Funds – FAQs
Q1. what are mutual funds?
Mutual funds are investment instruments that provide high yields to investors in comparison to traditional investments.
Q2. Can I invest in Mutual funds online?
Yes, the Fund houses and managing companies provide the facility to avail the investment facility online.
Q3. Does SBI provide the Mutual Funds investment facility?
Yes SBI provides the investors the opportunities to invest mutual funds through SBI.
Q4. what is a broker?
A broker is a person who helps you with the investment procedure in mutual funds. He guides the investor to invest in schemes that can be beneficial for the investors.