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How to Start Investing in Mutual Funds Online?

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The easy accessibility of mutual funds has made them highly popular amongst investors. You can invest in mutual funds online through the asset management company’s website directly or through intermediaries and brokers. But before you can start investing you will need to fulfil certain conditions like completing your mutual fund KYC, providing your details and filing the necessary forms. Let us find about more about the online process of investing in mutual funds.

Prerequisites to Investing

Before you start investing your money in any mutual fund scheme you will need to take certain decisions like:

  • Identify the Goal for Investing - The first step in your mutual fund investment journey is the identification of a goal which can be buying a home or a car or funding your child’s education or retirement or anything else. The quantification of this goal will give you clarity about how much funds you need and after how many years. This will help you choose the right scheme and the right SIP amount for achieving the set goal.
  • Choosing the Scheme - This decision becomes easier once you have a set goal in mind. Do some research about the different types of schemes and their investment strategies and check which one can help you achieve your goals. Equity funds are good options if you are looking for long-term returns while debt funds are highly suitable if you are looking for stability with low risk. Your risk appetite, your preference for any instrument and the track record of the asset management companies are some of the factors that can help you choose a scheme for investing.
  • Choosing the Route to Investing - You also need to decide whether you wish to invest a lumpsum amount or go for the SIP or the systematic investment plan route. The former is suitable if you have spare funds and you wish to use them immediately, but the SIP option is recommended if you wish to follow a disciplined and structured approach. A SIP investment can be started with as low as Rs 500 or Rs 1000 and helps you become more disciplined in your savings.

Complete Your KYC

Once you have zeroed in the scheme or fund in which you wish to invest you need to complete the mandatory Know Your Customer or KYC formalities. This step is a must for every investor. This involves submitting the KYC form, copies of your Permanent Account Number or PAN, Aadhar Card, Proof of your age, residence and identity.

The process also involves the submission of a copy of a cancelled cheque leaf bearing the IFSC or the Indian Financial System Code and the MICR or the Magnetic Ink Character Recognition of your bank.

With the completion of the KYC, you can start investing.

Ways to Invest

There are several ways to invest in mutual fund schemes:

  • Directly via the website of the mutual fund company
  • Banks and Brokerage Firms
  • Investor Service Centres of Mutual Funds or Registrar and Transfer Agents of mutual funds
  • An online mutual fund distribution channel provider

When you invest in mutual funds online or offline through intermediaries you will have to pay some fees or transaction charges. The intermediary broker or agent will provide you with all the information like the features of various schemes besides guiding you about the benefits of each scheme.