How to Invest in Mutual Funds Online? – Online Platforms, Process, Perks & more
Last Updated Date: Aug 30, 2023We have provided this guide wherein you can check the appropriate manner, or rather the easiest manner of Mutual Funds investment, i.e. Invest in Mutual Fund Online.
Mutual funds are a great way to make the assets work and to reap excellent benefits in the long run. However mutual funds can also be extremely risky.
Mutual funds online is an extremely convenient way to invest in mutual funds of various schemes. It comes with many benefits for the investors and is therefore becoming extremely popular.
With more and more fund houses providing online platforms for investment, remote investors are reaping the excellent benefits of mutual funds online.
How to Invest in Mutual Funds Online?
While planning to invest in mutual funds it is important to do risk profiling. Risk profiling means, finding out the amount of risk that one is capable of taking.
After doing the risk profiling one should divide their assets to invest them in both equities as well as debt instruments.
This is a good idea as the risk will be balanced out. One can compare the mutual funds based on the investment objective as well as past performance.
After doing the comparison one should decide the mutual fund scheme that is ideal to invest in and then make the online or offline application for the same.
Moreover having diversity in the investment and also having follow-up is important to ensure the best results out of the investments.
Therefore before investing in mutual funds one must do proper research about their risk profile, affordability, plans for the future etc.
All of these factors greatly influence the type of investment one might have an interest in making.
One must also take into consideration the purpose of investing and how soon the money will be required.
Consulting a financial advisor for the same is a good idea as they have more ideas about dealing with money and investments in the market.
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Step by Step Process of Online Mutual Fund Investment
Here are the 7 easy steps to Invest in Mutual Funds online.
1st Step – Find a Mutual Fund Broker or an AMC
2nd Step – Open a Demat Account or Mutual Fund Account with the Broker or AMC
3rd Step – Download the App provided by Mutual Fund Broker or AMC or Login to the Web Platform provided by the broker or AMC
4th Step – Set-up a Goal for Mutual Fund Investment, You can choose from various Goals available in the Platform or create your own Goal
5th Step – Analyze all the recommended Mutual Funds properly
6th Step – Shortlist Funds as per your Goals & requirements
7th Step – Pay for the Funds you want to Invest in or Set-up a recurring deduction from your bank account in case of SIP
Modes available to Invest in Mutual Funds Online
Investing in mutual funds online is an extremely convenient and hassle-free way of investing for investors. It gives easy options for investing as well as transparency.
Official Websites
One can invest in mutual funds online through various official websites. This is because most of the fund houses offer official websites to work on.
A person has to simply register and follow the instructions as required by the official website. We can complete the KYC process online.
The information is verified and after verification one can start investing. Online mutual fund investments are quick, easy, and simple therefore several investors prefer this.
They save a lot of time as well as money.
Mobile App
There are various fund houses that also provide mobile apps through which the investors can manage investments.
One has to simply download the app and then register on it. These applications allow investors to buy or sell units, view account statements, view other details, etc.
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Why Invest in Mutual Funds Online?
Mutual funds create a way to make one’s money work. It brings great returns and with the right planning and investment mutual funds can change lives.
Here are the benefits of investing in mutual funds.
Professional management of assets
Mutual funds are managed by professionals. This ensures that the money is in the right hands. These professionals are responsible to research the market fund investor etc.
They are well versed with investments and other factors of the field. In mutual funds, the money is handled by these professionals and therefore they know how to earn good returns with it.
The market can be a tricky place for outsiders however because these professionals are experienced with the working of the market they know the time, behavior and trends of the market.
This is exactly why investing in mutual funds is a good idea because of the professional handling of funds.
Higher returns
When compared with term deposits, mutual funds offer better returns on investments. This is because mutual funds invest in various instruments.
Mutual funds like equity offer higher returns but are also equally risky. Therefore mutual funds are a thing for people who have a risk appetite.
Diversification
With the help of a financial advisor, one can diversify investments in mutual funds.
This is a smart move because if one of the stocks or assets is not performing the other will help in balancing it out and therefore the investor can still enjoy good returns on the investment overall.
Convenience
Investing in mutual funds online is extremely quick, easy as well as hassle-free. With a few clicks, one can start investing in different mutual funds. Moreover, even KYC can be done online.
Low cost
A general misconception about investing in mutual funds is the fact that one requires a lot of capital for the same.
One can easily start investing in mutual funds with a starting investment of 5000(lump sum) or 500 for a monthly SIP.
Moreover by opting for online mutual fund investment one saves on the additional commission that is often taken by the distributors or agents.
Mobility
What are the biggest benefits of investing in mutual funds online is the fact that a person can easily invest without having to travel to the place?
This means a person can also invest in mutual funds from remote areas. This is beneficial for not only for remote investors but also for companies as their reach for investors increases.
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Types of Mutual Funds available for Online Investment
Here are list of various types of Mutual Funds available for Investment in multiple online platforms –
Growth or Equity Schemes
Growth or equity schemes invest in the equity share. The investment objective of growth or equity schemes is capital gains generally over medium or long term investment.
They are linked to highly volatile stock markets and are associated with higher risks. However, when given long term they do offer excellent returns.
Therefore for investors who are ready to take the high risk, it is a great option.
Debt Funds
Debt funds are also what we call the fixed-income funds. The debt funds invest in fixed income or debt securities. This is a regular, steady, and risk-free option for investors.
Balanced Funds
Balanced funds invest in a combination of debt instruments along with equity shares. These funds come with moderate risks over the medium and long-term.
Tax Saving Funds
Tax saving funds are a great option for a person focusing on saving tax. At the same time, they can focus on growing their capital.
This is a great option as the investors of tax-saving funds get tax rebates under section 80c of the income tax in 1961.
Open-ended Schemes
As the name suggests open-ended schemes allow the investors to enter and exit the scheme as per convenience.
This is because we purchase and sell the units in open-ended schemes continuously. The purchase and the sale of the funds come under the Net Asset Value (NAV) calculation.
Close-ended Schemes
Unlike open-ended schemes and investors cannot exit the scheme before the end of the term of a close-ended scheme.
Moreover, the investors cannot buy units in a closed-ended scheme after the New Fund Offer(NFO) is passed.
In a closed-ended scheme the unit capital is fixed and only a specific number of units can be sold.
Conclusion – Invest in Mutual Funds Online
With proper guidance and knowledge, one can reap excellent benefits of mutual funds.
Mutual funds are indeed subject to market risk however it all depends upon the investment game of the investor. Investing in mutual funds gives favorable outcomes in the long-term.
Before dwelling into mutual fund investments one must do proper market research and also other preparations like asset allocation, risk profiling, etc.
It is best to consult a financial advisor for investing in mutual funds especially for beginners.
However, when it comes to using online platforms for mutual fund investment it is best to use trusted websites as well as applications.
Online fraud is extremely common and therefore it is important to be aware and awake all the time.
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