Want to learn how to invest in mutual funds? It is definitely not rocket science that you should be worried about! Yes, you may have heard of people investing in successful funds in the market like the Mirae asset large cap fund or other such funds across categories and wanted to do it yourself too. Well it is possible with a little strategy and effort on your part. There are some steps that you will have to follow in this regard.
How to invest in mutual funds in India- Things that you should know
Now, you may be wondering how to begin investing in mutual fundsin the country. You can start off by getting the Know Your Customer (KYC) formalities completed at your end. Once KYC is done, you can then start investing in mutual funds as per the guidelines of the Securities and Exchange Board of India (SEBI). If you are a completely new investor in the market, you will have to implement KYC formalities via the intermediary which is registered with SEBI. This could be a mutual fund company/house/firm, an online platform or even a distributor. The process is also done through KRAs or KYC registration agencies.
It is a one-time affair that is compulsory to prevent any chances of fraud as per SEBI. If you are operating offline instead of going to any online mutual fund investment platform, then you can simply fill up the form after downloading the same from the intermediary’s site. Thereafter, attach hard copies (self-attested) of your address and identity proof (check the documents required) and paste your passport-sized photograph onto the form prior to signing the same. Visit the branch of your RTA, fund house or investor service center for the verification procedure (in-person) and show all your original documents for this purpose. The paperless version has you finishing KYC online itself. The E-KYC or online method is either through the website, through an OTP (one-time password) on your phone and biometric system.
You will have to go to the website of the KRA or mutual fund firm for completing the process online and registering with your personal details. You have to upload the scanned and signed images of all necessary documents and get in-person verification done via video calls. You can also sign all documents digitally at your end. In the second method, you can get your PAN/Aadhar-based KYC executed via a mutual fund distributor/advisor that is registered with SEBI. You will receive an OTP on your phone. Enter the same for verification. In the biometric method, investors can complete KYC on their white-listed or registered device that is operated by the intermediary in this case with the help of biometric information.
Major documents that you require
Hold your horses! Before you start checking out suitable funds to invest in you should check out the documents that are needed for the KYC and verification procedure and also while making your investments.
These include the following:
- Proof of Identity- PAN Card, Any one document from Aadhar Card, Voter ID Card, Driving License or Passport and your latest passport sized photograph.
- Proof of Address- Any one document from Passport, Aadhar Card, Ration Card, Driving License, Voter ID Card, bank account passbook or statements and utility bills, i.e. telephone, electricity and gas bills.
- During Investments- Bank account type and number, email and phone number and IFSC Code.
Where you can commence investing
- Mutual fund firms/houses- You can physically visit the office of your AMC or the website of the fund house for commencing your investment in case KYC has been executed. Some AMCs also come with apps for investing in mutual funds. You can invest directly in funds that are offered by the mutual fund house/firm in this case.
- RTAs- Registrar and Transfer Agents- RTAs with SEBI registration are good places to invest and you should first complete the application form prior to submitting your bank draft/cheque at the branch office.
- ISC- Investor Service Centres are branch offices of RTAs or mutual funds in several parts of India. All transactions may be carried out here.
- Fintech platforms for investments- Online third party platforms for investments such as Groww and others comprise this category or even online aggregators of mutual funds. Everything can be done online and with minimal paperwork.
- DEMAT accounts- You can directly invest in funds via your demat account which has all securities held in it, i.e. exchange-traded funds, bonds, mutual funds, stocks and government securities.
- MFU- Mutual Fund Utilities can be another way to invest offline or online since these are shared platforms that are promoted by the industry itself and which have ownership of several AMCs for transactions.
- Stock Exchanges- SEBI has now allowed people to invest in mutual funds themselves via stock exchanges that are recognized. You can invest through the BSE (Bombay Stock Exchange) or NSE (National Stock Exchange) post completion of the one-time registration process.
Investing in mutual funds online
Here are the steps that you need to follow:
- Register on the website of the fund with details like your date of birth, name, email, mobile number and PAN. If you are not KYC compliant, then you can get this done online itself. If you are compliant, you have to put in your PAN for verification before you start investing.
- Provide your personal information including your profession, nationality, income and if you pay taxes in any other nation/country. You will then have to tick all the boxes for the terms and conditions.
- Fill up the details of your nominee, including the date of birth, name and allocation percentage you want for him/her.
- Enter your banking details including account number, type and IFSC Code. Then tick the box that confirms that redemption and investment will be taking place through your account.
- You can then choose the investment type, i.e. one-time lump sum investment or SIPs (systematic investment plans). SIPs and ELSS plans often come with insurance as well. Choose the SIP amount and period, the scheme/plan and the investment method.
- Make your online payment to complete the process.
