One of the biggest concern of today’s internet savvy investors is that how to invest in Mutual Funds in India online? Currently, we will find many such options. But which one is best suitable to you?
Below I listed them briefly for your understanding and I hope your all queries will get answered about choosing the right mode of investment.
1) Through Agents or Brokers-This is a typical way of investing in India since long. In this option you choose the agent and calling him, he will come to your doorstep and fulfill all necessary formalities like collecting necessary documents for KYC purpose, taking signatures and submitting the forms to respective mutual fund companies. You no need to bother about processing part. He will earn commission directly from mutual fund companies which is adjusted against your NAV. Hence you will not notice the expenditure part in your account statement too. But in reality, if you stay invested for long then he earns more than any insurance agent.
Mutual fund commission is structured in such a way that if you stay long and invested amount grows well then your agent will also earn more. But nothing is free in this world. Hence if your agent is providing service like completing all formalities related to processing, helping you in choosing the right fund based on your requirement and providing you the post-investment service too then I don’t think you can stay away from his/her service, especially new investors who does not know about basics of mutual fund. But the question to be asked is, whether he is capable of providing all service to you or just acting as courier agent who delivers your signed copy of documents to mutual fund companies is question you need to check out before going with any agent or broker. This type investment is completely OFFLINE mode for you.
2) Mutual Fund Companies-All mutual fund companies provide you to invest directly. Here in this mode of investment first you need to download the forms, submit it with filling and submitting the necessary documents (if KYC not done previously). Once the folio (it is like your bank account number and will be unique) generated then you can invest online. Here there are two options for you to choose. One is a normal plan where distribution expenses are adjusted to NAV and another format is Direct Plans where there is no distributor expenses and cheaper to normal plans. The detailed difference is already written by me in my previous posts about Direct Plans and how one can opt for Direct plans. Below are the related posts on this topic in detail.
So in my view, if you are a totally informed investor (it is hard to judge one’s knowledge himself 🙂 ) then it is always a best cheap option to go for DIRECT PLANS. Otherwise, go for normal plans.
3) Through Online Portals-Many have a great misconception that investing through online portals like FundsIndia or Fundsupermart is best and cheapest mode of investment in mutual funds (exactly like buying online term insurance). I agree that they offer you a great convenience of investing Online and you can review all investments at one place. But still, this type of investment is as much as like choosing the broker (who is not charging you any upfront commission directly) or investing through mutual fund companies normal plans.
These online portals even though not charge you anything upfront as cost, but still they collect the commission from mutual fund companies and will be adjusted to your NAV. This option is best to those who are looking for investing online, convenient for tracking their investment and one point of a solution to all your investment quarries irrespective of mutual fund companies. But the cost wise considering, this type option still costlier to DIRECT Plans.
4) Through online Demat Accounts– This type of investing is through your demat accounts where you use this account for your stock trading or holding stocks. These stock brokers such as ICICI Direct, HDFC Securities or Sharekhan offer you investing in mutual funds. But usually, each SIP or investment is charged here directly from your investments and also they receive the commission from respective mutual fund companies. So even though this option seems to be online but costlier than the option of Online Portals.
5) Through CAMS or Karvy-These are like middlemen between you and mutual fund companies for record keeping and processing and will be appointed by mutual fund companies. You can invest through them also exactly like what I mentioned in POINT 2. Currently, they offer online investments only for selected mutual fund companies. But the great convenience of service they provide you is to view your all portfolio at one place and you can request consolidated account statement from them (irrespective of who the service provider) by submitting your request. Visit below links for the same.
Even CAMS offer you the service of Portfolio creation and maintenance of mutual funds, Listed Equity Shares, Bonds, Savings Schemes, Insurance, Commodities, Real Estate etc.
You can check the details HERE.
6) Banks-Last but not the least in this category are through Banks. Banks usually have access to your account details. So they lure you to invest in mutual funds. Their only motive is SELL and are least bother about analyzing your requirement. Also, you are not sure the current employee who is very much friendly with you now may be there for long in the same bank and branch to guide you in future. Hence it is always best to AVOID investing through Banks.
So there are many ways to invest in India either online or offline according to your comfort. Choosing the right service for investing will actually ease your life. Hope I covered all the options available in India currently.
7) MF Utility–MF Utility actually integrates all stakeholders of the industry like investors, mutual fund companies, and service providers on one online platform. This is an initiative by AMFI (Association of Mutual Funds in India) under the approval of SEBI. The beauty of this platform is, you can do all mutual fund transactions under one roof, irrespective of a Mutual Fund Company or funds. Hence, this platform acts like “Transaction Aggregation Portal”.
This platform provides online access to investors to connect with service providers (like Karvy or CAMS), Banks, Mutual Fund companies, Payment Gateways, and KYC registration agencies (CVL KRA). Therefore, you may say a one-stop solution for investors. This facility will available for 24×7 for access.
This is owned by all mutual fund companies and operated by MF Utilities India Pvt Ltd (MFUI). I wrote a complete post on this. Refer the same at “MF Utilities-Online Investment Platform for Regular and Direct Mutual Funds“.
8) Direct Funds Providing online portals-Now there are few private players who offer you direct plans online. There are many such portals came up. One of them is Inestza. I wrote a complete post on the features of this portal. Refer the same at “Invezta.com: Invest in DIRECT Mutual Fund schemes online at one place“.