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[How to] Invest in Mutual funds in India – online / offline options

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Mutual funds are one of the best options for Retail investors to invest their money in different asset classes. It gives benefit of professional management of your money, offers liquidity, allow diversification and tax benefits.

A.   Quick overview of process to Invest in Mutual funds

1) Submit KYC Form – KYC is must for the first time investors and need to be done ONLY ONCE and valid for all Mutual fund houses.

You need to submit KYC form along with the Proof of ID & Address. You can submit it to your nearest distributor, MF branches, authorised banks, CAMS / Karvy offices etc

You can download the KYC application form here.  

Read – New Central KYC process must for new Mutual Fund Investors (Feb 2017).

 

 

2) Select a Mutual Fund & Scheme – Depending on your time horizon, goal & risk appetite, select mutual fund scheme for investment (Equity, Debt, Balanced, Gold etc).   Some of the best performing funds are provided in this post.

Select Investment option – Growth, Dividend, Dividend re-investment. If you do not need regular money & investing for long term, select growth option.

3) Submit MF application & SIP Form – Once the KYC is approved (within 5-7 days), you can submit the Mutual Fund Application form alongwith the cheque for the investment amount.

If you want to make monthly systematic investment, you can submit the SIP mandate form, so that specified amount is debited directly from your bank account & get invested in selected mutual fund scheme.

 

B.   Different ways to Invest in Mutual Funds

You can invest in Mutual funds either through agents or directly with mutual fund companies. Also there are options for offline as well as online transactions.

Following are the different ways to invest in Mutual Funds:

Through Agents

Offline

  • through Mutual Fund Agents
  • through Banks (distributors)
  • through Corporate agents

Online

  • through share broking portal (e.g ICICIDirect)
  • through online MF Agents ( FundsIndia, FundsSupermart etc)
  • through Banks (e.g HDFC ISA Account)

 

DIRECT

  • through Mutual Fund Branch
  • through Investor Service Centre (Karvy / CAMS office)
  • through Mutual fund online website

You can increase your returns by option for DIRECT PLAN of Mutual Funds. Read my post on Direct Plan

 

Summary

If you are first time investor and investing small amount, I suggest you go through an agent / advisor who will help you with formalities and basic guidance.

Some best performing funds are listed in this post. Stick to them initially even if the advisor suggests something else.

Once you gain some experience of investing in Mutual Fund, you may consider investing directly with Mutual Fund company to earn a bit extra.

 

Feedback / Comments: Please share your experience of investing in Mutual Fund. Which route have you chosen? Any feedback / queries, please use comments box below.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

53 comments

  1. Dear Sir,
    kindlt let me know steps to invest or sell various mutual gunds online.
    I am already registered with mant M.f. with KYC and Pan

    • Dear Mr Sharma,

      You can invest in Mutual Funds Online

      through Mutual Fund website
      through share broking portal (e.g ICICIDirect)
      through online MF Agents ( FundsIndia, FundsSupermart etc)
      through Banks (e.g HDFC ISA Account)

  2. Out of the 3 options for investing in mutual fund online ,which option do think is best one and why ?

    • Each has its own pros & cons as discussed inthe post above.

      If you can do it yourself & select funds, then gof ro DIRECT Option.

      If you are not that finance savvy, then you need to go through an agent/ advisor.

  3. Hi Vivek,

    I am new to MF’s and planning to invest monthly in MF’s (say 5k).
    Should I invest via individual MF websites or via online MF Agents like FundsIndia ?
    What difference will the two approach make to my LTCG ?
    Does agents like FundsIndia have any commission when I redeem my units of any MF
    Which one is the better option ?

    Need your assistance

    Thanks,
    Prakash

    • Hi Prakash, as you first time investor, you will need more guidance than savvy investors.

      First let me explain the difference.
      1) LTCG – there is NO difference whether you invest DIrect / via agents

      2) Cost – Some difference. If you invest directly via MF companies, then you can invest in theior DIRECT Plan which is bit cost-effective as they donot need to pay commission to online / offline agents. So DIRECT plab will have higher NAV (means higher income). If you invest in DIRECT Plan, you can saver around 0.50 – 1% annually.

      3) But the advantage with onlinr providers is that you can be free from hassle of filling multiple forms, tracking portfolio on multiple portals etc. You can get all these in one place.

      So if you are investing Rs 5000 per month, (60000 annually), 1% will come to just Rs 600. which makes it Ok to go to the agent ratehr than direct to save hassle.

      In future, if you are investing large amounts, then you can consider going DIRECT.

      • Hi Vivek,

        Thanks for the information.
        I heard like the market is in good shape now and that dark days are coming soon.
        So is it the right time to invest in MF’s now or should I wait till the unit price comes down.
        If I am to invest now then which funds do you suggest me to invest.

        Thanks,
        Prakash

        • Hi Prakash,

          It is difficult to time the market. The market has run up in last 6 momths but definitely there is lotof scope in future.
          It is possible that it may go down in short term and be volatile.

          That’s why it is suggested to invest in Mutual funds via SIP, where you invest small amounts on monthly basis & you can average your cost. Also, it gives you diversification across various stocks.

          if you are investing for long term, say 7-10 years, start investing in Equity funds via SIP method.
          Some good funds are listed in post below:
          http://wealth18.com/best-mutual-funds-to-invest-in-2014-top-performing-mutual-funds-in-india/

  4. Kindly let me know how to start investing in shares

    • Hi Nirmal, You need to open a DMAT account & broking account with a broker.
      You can also open account with online brokers lik ICICIDIrect, HDFCSec, Reliance money etc.

      Alternatively as a small investor, you can invest via Mutual funds. the process is given in post above.

  5. Hi Vivek,

    If I invest through some ISC say karvy, can I use Direct option in that case?

    Thanks,
    Vivek

    • Yes, If you invest at ISC office, youc an use DIRECT Option.

      • Hi Vivek,

        I am a little confused here. Got a call from Axis AMC, what they tell me is that if I invest directly with them (rather than through karvy) only then I will get the Direct option. That is, if I go for my investment through karvy, I will not get the Direct option and moreover I will have to pay commission which is not the case if I invest directly with Axis.

        I am a bit confused here. Is the Axis guy misleading me? Can you clear my confusion here. Since karvy is a distributor with axis I will only be paying Rs. 100 or 150 as transaction charges. Am I right?

        Whats with this commission and direct option. Kindly help.

        • Hi Vivek,

          Normally when you apply throgh aent, they get .5% to 1% commission which is already factored in NAV. You donot pay it separately.

          Thats why now there is this DIRECT option where MF companies saves that commission and NAV is bit higher than normal plan. So in effect, if you apply in DIRECT Plan, you save on agent commission of .5% – 1% .

          Karvy is one of the registrars for Axis Mutual fund. So if you submit form in one of the Karvy centre mentioned below, you can write “DIRECT” on the MF Form & submit:

          https://www.axismf.com/About-Axis-Mutual-Fund/contact-us.aspx

          You donot have to pay any transaction charges.

  6. Sir, I am 26 Yrs old and want to invest in MF with an SIP amount of 5000 PM will you please suggest me where should i invest and which MF is good for me to invest. Also please guide me through the options short term and long term investment

    • Hi Swapnil,

      Hi Sab,

      If you have no tax liability in India or already used 80C deduction limit, then you can also consider other Equity mutual funds.

      Any capital gain of Equity mutual funds after 1 year holding is Tax free.

      If you have a long term view, you can consider investing in

      ICICI Pru Focused Bluechip Eqty (G)
      Reliance Small Cap Fund (G)
      UTI MNC Fund (G)

      For short term view, it is better to invest in Liquid funds or bank FD.

  7. Sir
    I have purchased ulips of birla future gain n dec14.my premium payment is quarterly.should i continue with or stop them and start with sip in mutual funds. Please suggest. Thank you.

    • Hi Santosh, Can you please provide more details:

      1) Name of policy
      2) duration & when started investing ?
      3) premium Amount per quarter
      4) Sum assured for Insurance

  8. Hi vivek iam upendra 31 years old.planned to invest in MF on long term basis sip mode monthly 20000 .can I invest mf through agent or direct mode?and tell me best mfs

  9. Sir,
    i am 36 years can invest 10K per month for the period 10-15 years and confused to which SIP should i take and how to invest.

  10. Hi Vivek,

    First of all tons of Thanks to you for helping the person like me.

    I have invested in SBI Life ULIP plan (Smart ULIP Series II) in Aug 31 2010 for 10 yrs . I paid 50000 per year for 3 years and Sum assured is 250000.Actually without investigating directly invested in that becasue of the agent who is my best friend. After 5 years also that Flexi protect SeriesII fund is not increased much. So my question is that whether I should surrender that and invest in ELSS through SIP so that atleast I will get my minimum return as ULIP plans are having very high charges deduction?
    I am new to Mutual Fund investment But i have started investing in Equities since 2 yrs and got very good return.As per your posts if we invest in Top performing fund then those are already having high NAV. And if we invest in that then there will be more chances that will not get good return. If you mention some startup fund which are having less NAV and Top performing in last 1 yr or 2 yrs, it will be good for me to invest in that? I want to invest 3000/ pm to save Tax.

    • 1) It is not correct that funds which are performing well and have high NAV will have less chance of good returns.

      The current NAV donot determine the future returns. It is like if Reliance share price is 900 and Infosys share price is 2000, it doesnot mean that one is better than other. Or the one with low price has chance of giving better returns. it all depends on their fundamentals.

      You can consider following ELSS funds :
      Axis Long Term Equity Fund (G)
      Reliance Tax Saver (ELSS) (G)
      Franklin India Tax Shield (G

      Regarding SBI Life ULIP plan (Smart ULIP Series II) – Flexi protect SeriesII fund, I think the return over last 5 years is more than 50% . SBI (Smart Ulip Series -II) is a defensive ULIP which invests money primarily into Money Market, Corporate Bonds, Government Securities and remainder into Equities. As the fund name suggests the main motive of this policy is to protect & preserve your funds hence is invested into low risk low return instruments.

      • Thanks for proving valuable information.I want to invest 50000/annum for 3-5 yrs preferebaly in ELSS.Before that need to clear 2 doubts.

        1. Should I invest it onetime Or via SIP ? Why ?
        2.Is locking period from 1st day of installment or last installment?

        Thanks in advance.

        • Hi Sahadeo,

          1. It is better to invest vis SIP as you buy on different dates on different NAV to get benefit of averaging.
          2. Locking period is from date of each investment (or each SIP).

          Money invested on 15 July 2015 will have lock-in upto 14 July 2018
          Money invested on 15 Aug 2015 will have lock-in upto 14 Aug 2018

  11. Hirendrasingh Chauhan

    Hi,

    can you pls explain how diret buy & online buy through agent will have cost impact if I have 5 lac portfoloi.

    • Hi, If you have investment f Rs 5 lakh, the cost impact my be approx 0.5 – 1% depending on the scheme.

      i.e. approx Rs 2500 – Rs 5000 pet year.

  12. Hi Sir,
    I am 44 yrs of age and just want to start investing in elss.want to invest for 15 years ( Rs 15,000 per month).can you please suggest me what shall i choose.
    Moreover ,my wife is 41 years of age and wants to invest for 10 years( around 15k per month) ,what are the options.
    Regards
    Rahul

    • Hi Rahul,

      Have you both exhausted your 80C limit. In that case, choose the ELSS fund for the required amount. the other remaining amount can be invested in other funds as below:

      ELSS : You can consider following ELSS funds:
      Axis Long Term Equity Fund (G)
      Reliance Tax Saver (ELSS) (G)
      BNP Paribas Long Term Equity (G)

      Other funds – You can consider investing in following funds for long term:

      Large cap – Franklin India Opportunities (G), UTI Equity Fund (G)
      Midcap / small cap – SBI Small & Midcap Fund (G) , UTI Mid Cap (G)
      Diversified – UTI MNC Fund (G), ICICI Prudential Exports and Other Services Fund (G)

      Invest in GROWTH Option of all above funds.

  13. virat raj gupta

    Sir
    My monthly income is Rs.20000 from tuition at home. Please tell which ITR form should required for IT Return.
    Thanks
    Virat Gupta

    • Hi Virat,

      Normally for Business/profession income, you need to file ITR 4/4S.
      But some people consider this as Other Income and submit ITR 1 as well, if this is part time & lower income.

  14. niteen kumbhare

    Dear Sir, I m beginner in mutual fund investments. I want to invest for saving income tax. I can invest up to 5000 per month and on long term basis. Please suggest me elss scheme where I have the chances for better returns. Also is it right to put complete 5000 in sinelss elss or shall I distribute it among 2-3 schemes. Does the percentage of returns varies with quantum of amount invested?

    • Hi Niteen,

      You can consider following ELSS funds:
      Axis Long Term Equity Fund (G)
      Reliance Tax Saver (ELSS) (G)
      BNP Paribas Long Term Equity (G)

      % of return is not dependent on the amount invested.

  15. Hi Vivek,
    I have ongoing SIP in Franklin smaller co fund & UTI Midcap fund. All these are via agent ( regular plan)

    As I am already registered in both of those fund houses (Franklin & UTI funds) I have online access for any transaction (buy/switch/redeem) in those 2 fund houses .

    Now I want to invest 10000 each in Franklin High growth co fund & UTI equity fund in direct option.

    So, will it be good to invest in franklin high growth & UTI Equity funds (in direct plan option) by online (as I have online access to these funds)? Or, I should go for regular option by involving agent?

    I don’t want to disclose my new direct investments to the agent. Although the agent can track my SIPs (regular plan), will he be able to catch my direct investments too?

    Pls suggest

    • Hi, You can go ahead and make the direct investments online via the MF portal. Your agent will not be able to know.

  16. Taranpreet Singh Sodhi

    Hello Vivek,
    Can you guide me how much and where I should invest for better retirement life. I am 36 now.

    Secondly, which option gives me good return in ELSS or in other type of Mutul funds like Equity.

    Thanks & regards
    Taranpreet

    • Hi Taranpreet,

      As your time horizon is long, you can consider investing in Equity mutual funds.

      If you let me know following things, I can suggest some options :

      1) What is your existing investment pattern? Where are you investing currently.
      2) Have you invested via Mutual funds before
      3) Are you utilizing your full 80C limit of Rs 1.50 lakh. Which tax bracket are you in?
      4) How much is your surplus for making monthly investment ?

  17. Papai Chatterjee

    Hi vivek,
    I posted a query 3 week ago. Followed up 10 days ago. bt still not got any reply. Also, my comments are not visible in the website

    kindly revert to my query

    • Hi Papai,

      I am clearing comments from July & early August. Apologies for the delay and I will try to respond to your query in next couple of days.

      The comments will be visible once they are replied.

  18. Hi Vivek,

    I am a new investor want to start saving for my daughter who is one year old.Request you to please guide me which are the good mutual funds to invest so that i can invest small amounts at regular intervals.

    Regards,
    Jagannath

    • Hi Jagannath, It is good that you want to invest for your child. How much money you can invest every month.

  19. Hi Vivek,
    Thanks for a nice crisp informative article.
    I would like to know two things-

    1] For maximum diversification what should be the 2nd ELSS fund in each of the below case-
    me-
    i) Franklin India Tax Shield (G),
    ii) ?

    my wife-
    i) Axis Long Term (G),
    ii) ?

    my brother-
    i) ICICI Prudential Tax Plan (G),
    ii) ?

    2] How to register my DIRECT MFs (say ELSS MFs) with the bank with which i am holding a demat a/c? I want to keep all investments in demat form in one place for better managebility.

    Regards,
    Chirag

    • For you – (ii) – Axis Long term equity
      Wife -(ii) – Reliance tax saver
      Brother – ii) – BNP Paribas Long Term Equity

      Direct plans are not currently available in DMAT form.

  20. Dear Vivek,
    I want to invest in ELSS, so that’s the long term plan, ofcourse.
    I’m 35 years now. I’m utilizing 1.5 L of 80C. I’m in 30% tax slab. Since I’m new to savings through this route, so I’ll not go with DIRECT route as of now. I want some firm to manage my funds. Hence, please let me know which fund house should I register with and what all funds should be / can be selected. I investment, as of now, would be monthly, maybe between 5k-10k.
    Thanks for your advice !

    Regards,
    Sanjeev

  21. Dear vivek,
    I m 39 years old now ,, i need rs. 40 lakh approximately in coming 10 year. i can invest 15000 p.m.. So please suggest me…i’ve selected some funds, ICICI pRU eXPORT & OTHER SERVICES RP Growth,,,UTI MNC GROWTH..is it ok??to invest..i am need your valuable suggestion…

  22. Hi, I am 22 and have just started my job. I wanted to know if it is better to invest in stocks or mutual funds. If mutual fund then which one as i can invest 2-3k per month. Kundly guide

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