In this era of technology, everything can be done online – from opening a bank account to offering prayers at the Tirupati Balaji Temple. Mutual Funds being a product of the new era, is also available online. Before you begin the process to invest in a mutual fund, you need to do preparatory research on which mutual fund best suits you. You need to first choose whether you want an equity fund or a debt fund, a growth fund or a value fund, a hybrid/blended fund or a monthly income plan. You should decide whether you are looking for capital appreciation or stable income. You have to decide your risk tolerance. You need to look at the Net Asset Values (NAV) of different funds, its returns history, CRISIL ratings, companies in the portfolio, etc.
Prerequisites for Opening a Mutual Fund Online
These 2 points have to be kept in mind before you begin to buy a mutual fund online:
- Ensure that your PAN is KRA KYC-compliant. KRA stands for KYC Registration Agency and KYC stands for Know Your Customer. If your PAN is not KRA KYC-compliant, you can do so through the AMC’s website itself.
- You should have a functional bank account with netbanking facilities.
Step-By-Step Guide To Buying Mutual Funds Online
Once you have decided which fund you want, you can follow the steps given below to start a mutual fund:
- Go to the website of the Asset Management Company (AMC) whose fund you have chosen.
- Click on ‘New Investor’ or other similar relevant links that will take you to the profile creation page.
- Fill your PAN, personal details, contact details, bank details and nomination details on the site’s application form.
- KYC verification is mandatory. It is also compulsory to provide FATCA compliance if you are a US citizen.
- Create a username and password.
- Choose the fund you want to invest in and make an online money transfer to the fund to create your own portfolio.
You can also register yourself with online mutual fund portals such as FundsIndia and Fundsupermart, from where you can manage even multiple fund portfolios. They are an online brokerage agency and will charge the AMC with a small commission on transactions. Alternatively, you could open a demat account with any security brokerage firm such as Sharekhan or ICICI Direct, which will allow you to invest in funds. Many banks have mutual fund divisions, and if your chosen fund is part of a bank, you could log in to the bank’s netbanking portal and create a mutual fund profile through it.
GST rate of 18% applicable for all financial services effective July 1, 2017.