How to make investments in direct plans of mutual funds?
Mutual fund schemes offer both direct and regular plans. This means while investing in a mutual fund scheme, an investor gets two options to start with his/her investment. Most of the investors opt for the direct plan through which anyone can invest in a mutual fund. Direct plans of a mutual fund scheme allow the investors to directly invest in the scheme without taking any help of the intermediaries or distributors. Moreover, the direct plan of a mutual fund scheme comes with several other benefits over the regular plan due to which most of the investors subscribe to a direct plan.
If you are willing to make an investment in the direct plan of a mutual fund scheme, it is important to know how to invest in the direct plans of mutual funds.
Platforms to Invest in Direct Plans of Mutual funds
- Official websites of the Asset Management Companies (AMCs)
- Mutual fund utility
- Mutual fund registrars like CAMS/Karvy MFS
- Online platforms from SEBI-registered investment advisers (RIAs)
Documents Required to Invest in a Direct Mutual Fund
The following are the most essential documents that you must have to invest in a direct mutual fund:
- Permanent Account Number (PAN)
- Aadhaar Number
- A bank account
- The KYC documents
Procedure of Investing in Direct Plans of Mutual Funds
Anyone can invest in a direct plan of a mutual fund. Since direct subscription doesn’t include any broker or distributor, the investors have to take care of the processing activity on their own which includes KYC compliance, submission of the application, portfolio consolidation, and nomination. This can be done either offline or online. However, the easiest way to do that is through online platforms. The investors have to go to the website of the desired fund house and follow the given instructions one by one.
- Offline Subscription
- At first, choose the mutual fund scheme that you want to invest in.
- Visit the nearest branch of the fund house and submit the application.
- Pay the amount charged by the fund house to subscribe to the direct plan of the desired scheme.
- Online Subscription
- Updating KYC details
- Register your account
- Select the scheme and plan
- Investment Type - Specify whether you want to pay a lumpsum, one-time payment, or via a Systematic Investment Plan (SIP).
- Holding Type - Here you have to choose whether the type of holding will be a Demat or Non-Demat account.
- RIA Code - This will be applicable if you are obtaining the services of a Registered Investment Adviser.
- Payment Mode- You have to select a payment mode from NEFT, Net Banking, IMPS, Debit Card, etc. The payment options will vary across fund houses.
- Bank Details - Provide particulars like the name of the bank, account type, account number, and IFSC Code. You will also have to mention the address of the branch and MICR code.
- Verify and finish the transaction
An investor can invest in the direct plans of mutual funds both offline and online. People who want to subscribe to the direct plan of their desired mutual fund scheme can do that by visiting the office of the Mutual Fund Company or through their registrars like Karvy MFS or CAMS. Here is the step-by-step procedure for doing that:
Investors who don't want to take the hassles of visiting the fund house can invest in the direct plans online. This can be done through the official website of the mutual fund company where you want to invest in. The process of online subscription is detailed below:
Individuals who are investing in a mutual fund scheme are mandated to take care of their KYC (Know Your Customer Formalities) first. The process of KYC updation is easy and can be done by following some simple steps. Moreover, this process is required to be done only once. You can use the details across various platforms and mutual fund companies. The process can be completed both online and offline. While for doing it online the investors need to visit the KYC updation portals, for offline updation the investors need to visit the registrar or fund house.
Note - Since the KYC is connected to the PAN of the applicant, while updating your details through a KYC platform, ensure that the process is completed through your PAN details.
After completing the KYC formalities in the next step, you have to register your account with the desired mutual fund company. In order to register yourself with a mutual fund company, you have to first make an account. The details that you have to fill up in the online portal are same as the details requested on a mutual fund application form. Alternately, some of the asset management companies might ask you to do a normal registration and then a detailed registration after the completion of the transaction. The process might differ from one fund house to another.
Once you are done with the registration process with the desired fund house, go to the ‘Investment’ section and choose the plan type as ‘Direct’. When you select the Direct option you will be able to choose from the Growth and Dividend option. While the dividend option will give you a regular earning, the growth option will slowly build your wealth over a period of time. Click on any of the options that match your investment objective. Here are some of the other details that you have to specify:
After submission of the details, you will be required to verify them. Check for typos or mistakes if any. You might also have to authenticate the submission of your form through an OTP (One Time Password) that you will receive on the mail ID or mobile number registered with the fund house. The authentication process might be completed by some fund houses right in the beginning. After verification, you have to finish the transaction using the payment mode that you have opted earlier. A Transaction Reference Number will be sent to you. After successful completion of the payment, you will get a confirmation of the same on your mobile and email id.
Note - Though the process can slightly vary from one fund house to another, the online investment in direct plans of mutual funds is broadly the same.
Mutual Fund investments will be subject to market risks. Any mutual fund listed in the document does not guarantee fund performance or its underlying creditworthiness. Do read the mutual fund document thoroughly before investing. Specific investment needs and other factors have to be taken into account while designing a mutual fund portfolio.
GST rate of 18% applicable for all financial services effective July 1, 2017.