Mutual Fund investing in India has come a long way, from investments being made primarily through agents, to the current scenario of multiple modes of investments. Technological advancements have opened new avenues for the Mutual Fund industry, with different ways of purchasing Mutual Funds, which are both convenient and cost-efficient for the investor. Let’s look at some of the most popular ways of buying Mutual Funds in India today:
Investing through agents: This method is one of the oldest ways of buying Mutual Funds. It is also considered to be a convenient method of investing. Although newer methods of investing have emerged, buying through agents is still followed by many individuals, especially older people with existing relationships. You will simply need to call the agent, who will come to your home with the required forms, help you fill the forms, submit the forms and other documents to the Mutual Fund office and give you the certificate. All these services come to you for a fee. Typically, agents charge 1% of the investment amount as their commission. In addition to the above services, some agents also offer advice on which Mutual Funds to invest and which ones to avoid. However, you must do your own research and invest prudentially, as agents may have their own hidden interest in some funds. You can check out the list of agents in your city by clicking here.
Investing through AMC directly: You can invest in a mutual fund scheme by investing directly through the Asset Management Company (AMC). The first time you invest in any Mutual Fund, you will have to go to the Mutual Fund office to make your investment. Thereafter, any further investments in different schemes of the same fund can be made online (provided this facility is offered by the AMC) or offline, using the folio number in your name. Some AMCs also have the facility of sending an agent to help you with your investments. Remember to check the banks they have partnered with, as not all AMCs would have partnered with the bank of your choice. The biggest advantage under this method is the amount you save on commissions and charges, as you personally make the investment directly. You also don’t need a demat account to invest in this method. However, this process involves the initial trouble of going to different AMC offices and filling out application forms, if you wish to invest in different funds.
Investing through Online Portals: There are many online portals in India, through which you can invest in various Mutual Funds, the most prominent being FundSuperMart and FundsIndia. These portals offer schemes from various Mutual Fund companies in the country, and also have tie-ups with banks for funds transfer. You will need to open an account with these portals, by filling in the application form and submitting all necessary documents, along with a nominal account opening fee. On receipt of a confirmation message from the portal that your account is active, you can start transacting in Mutual Funds. These portals make money by getting paid a commission from the AMC every time you make a purchase or sale.
Investing through your bank: Most banks have a tie-up with specific fund houses, and work as Mutual Fund agents. You can enquire if your bank has partnered with the Mutual Fund you wish to invest in, and if yes, invest through your bank.
Investing through Demat & Online Trading Account: If you have a demat account, you can buy and sell Mutual Funds through this account. Popular brokerages offering this service include ICICI Direct, HDFC Securities, Geojit Securities and Sharekhan. Though this method gives you the flexibility to control all your investments in one place, you will have to shell out commissions, similar to how you pay agents. Commissions can either be a flat amount or based on a percentage of the investment amount, and can work out to be quite sizable.
Other Methods: You can also invest through the Mutual Fund transaction processing company - CAMS, by downloading the application form from the Mutual Fund website and submitting it to CAMS or Karvy Investor Centre with the other documentation.
Cost and comfort are the two main factors to be considered while choosing the method of Mutual Fund investing. You should consult your Financial Planner to help you choose the best mode of investments. Do write in to share your experiences while purchasing Mutual Funds.
Team Getting You Rich
Investing through agents: This method is one of the oldest ways of buying Mutual Funds. It is also considered to be a convenient method of investing. Although newer methods of investing have emerged, buying through agents is still followed by many individuals, especially older people with existing relationships. You will simply need to call the agent, who will come to your home with the required forms, help you fill the forms, submit the forms and other documents to the Mutual Fund office and give you the certificate. All these services come to you for a fee. Typically, agents charge 1% of the investment amount as their commission. In addition to the above services, some agents also offer advice on which Mutual Funds to invest and which ones to avoid. However, you must do your own research and invest prudentially, as agents may have their own hidden interest in some funds. You can check out the list of agents in your city by clicking here.
Investing through AMC directly: You can invest in a mutual fund scheme by investing directly through the Asset Management Company (AMC). The first time you invest in any Mutual Fund, you will have to go to the Mutual Fund office to make your investment. Thereafter, any further investments in different schemes of the same fund can be made online (provided this facility is offered by the AMC) or offline, using the folio number in your name. Some AMCs also have the facility of sending an agent to help you with your investments. Remember to check the banks they have partnered with, as not all AMCs would have partnered with the bank of your choice. The biggest advantage under this method is the amount you save on commissions and charges, as you personally make the investment directly. You also don’t need a demat account to invest in this method. However, this process involves the initial trouble of going to different AMC offices and filling out application forms, if you wish to invest in different funds.
Investing through Online Portals: There are many online portals in India, through which you can invest in various Mutual Funds, the most prominent being FundSuperMart and FundsIndia. These portals offer schemes from various Mutual Fund companies in the country, and also have tie-ups with banks for funds transfer. You will need to open an account with these portals, by filling in the application form and submitting all necessary documents, along with a nominal account opening fee. On receipt of a confirmation message from the portal that your account is active, you can start transacting in Mutual Funds. These portals make money by getting paid a commission from the AMC every time you make a purchase or sale.
Investing through your bank: Most banks have a tie-up with specific fund houses, and work as Mutual Fund agents. You can enquire if your bank has partnered with the Mutual Fund you wish to invest in, and if yes, invest through your bank.
Investing through Demat & Online Trading Account: If you have a demat account, you can buy and sell Mutual Funds through this account. Popular brokerages offering this service include ICICI Direct, HDFC Securities, Geojit Securities and Sharekhan. Though this method gives you the flexibility to control all your investments in one place, you will have to shell out commissions, similar to how you pay agents. Commissions can either be a flat amount or based on a percentage of the investment amount, and can work out to be quite sizable.
Other Methods: You can also invest through the Mutual Fund transaction processing company - CAMS, by downloading the application form from the Mutual Fund website and submitting it to CAMS or Karvy Investor Centre with the other documentation.
Cost and comfort are the two main factors to be considered while choosing the method of Mutual Fund investing. You should consult your Financial Planner to help you choose the best mode of investments. Do write in to share your experiences while purchasing Mutual Funds.
Team Getting You Rich
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