How to invest in mutual funds SIP online; Here’s all you need to know

Once you are KYC-compliant, you can invest in mutual funds through lump sum or SIP. Here is how to do it.

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In order to invest in a mutual fund, it is mandatory that the investor is KYC-compliant.

Mutual fund investments enable investors to pool their money together, that is professionally managed. Mutual funds (MFs) can invest in stocks, bonds, cash or other assets. Investors can choose a mutual fund scheme based on their financial goal and start investing to achieve the goal. Investment in a mutual fund can be made either in lump sum or through an SIP (Systematic Investment Plan).

Over the years, the Indian mutual fund industry has witnessed exponential growth. At present the industry’s Average Assets Under Management (AAUM) stand at Rs 23.96 lakh crore (Rs 23.96 trillion), which is at all-time high. The AUM of the Indian MF industry has grown more than four fold in a span of 10 years from Rs 5.41 trillion as on 31st July 2008 to Rs 23.06 trillion as on 31st July, 2018. As on July 31, 2018, the total number of accounts (or folios as per mutual fund parlance) stood at 7.55 crore (75.5 million).

These phenomenal numbers cannot be achieved through the age-old paper application form for buying or redeeming one’s mutual fund investments. Data suggests that increasing number of investors are buying or selling mutual funds or starting their SIPs over the Internet. So, if you are still following the old track, it is time to upgrade and start investing in mutual funds online.

Here’s how to invest in mutual funds online:

Identify your purpose for investing

The first step towards investing in a mutual fund is to define your investment goals such as buying a house, child’s education, wedding, retirement, etc. If you do not have a specific goal, you should at least have a clarity on how much wealth you wish to accumulate and in how much time.

Become KYC-compliant

In order to invest in a mutual fund, it is mandatory that the investor is KYC-compliant. For this, the investor needs to submit copies of Permanent Account Number (PAN) card, an address proof, a passport size photograph, age proof, and a cheque, among others. You will need to submit copies of all these documents, which have to be self-attested. You can also become KYC-compliant online using the eKYC channel. Investor needs to fill in basic information and upload a soft copy of their PAN card and address proof to support the details filled. You should do your In-Person Verification (IPV) to confirm your physical existence through a webcam. For completing the IPV (In-Person Verification), you need to make a video call. You will be asked to show your original PAN card and address proof during the video call. So keep them handy.

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Another option to complete the eKYC procedure is through your Aadhaar number. Aadhaar-based eKYC simplifies the above procedure. All you need to do is to enter your Aadhaar number and authenticate it with an OTP (One-Time Password) sent by UIDAI. It will pre-populate all your basic details available in the UIDAI database in the form. It doesn’t require IPV through a video call.

KYC is a centralised and one-time procedure. Even if you are investing in multiple mutual fund schemes with different fund houses, you just have to go through the process only once. You can do your eKYC through different service providers’ website such as Karvy, CAMS or any mutual fund distributer’s site.

Choose the schemes

There are a number of MF schemes available in the market. Before investing you need to choose a scheme which suits your investment objective, your risk appetite, and your affordability, and see what suits you best. Depending upon your risk profile, you should divide your money between various asset classes and schemes that offer high returns accompanied with acceptable risks.

Invest in the schemes

Once you are KYC-compliant, you can invest in mutual funds through lump sum or SIP. Visit the website from where you want to invest. Search for a ‘Register Now’ or a ‘New Investor’ link. It will direct you to fill a simple form for creating an online account with the fund house. It will provide you a user name and password for transacting online and checking your mutual fund portfolio showing its returns. After filling the form, it will ask to provide your bank account details for setting up your monthly auto debit in case of an SIP. According to your convenience, you can choose any date for your monthly SIPs. The SIP will start after a gap of 30-40 days.

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Ways you can buy mutual funds online

You can either invest directly with a mutual fund AMC or hire the services of a mutual fund advisor. If you are investing directly, you will invest in the direct plan of a mutual fund scheme. If you are investing through an advisor or intermediary, you will invest in the regular plan of the scheme. There are several ways in which one can invest in mutual funds. One can invest online or offline or in direct as well as regular plans.

Directly with the AMC

You can invest in a mutual fund scheme by investing directly through the AMC. This is the cheapest route as the facility comes absolutely free for the investor. However, this is not the most convenient way to invest online. You can invest in only the schemes with that particular AMC. However, if you need to invest in other funds with a different fund house, you need to go through the entire procedure again. Only the KYC procedure will not have to be repeated. Remembering 6-7 different PINs for various fund houses can be a big headache.

Broker platforms

A mutual fund broker or a distributor provides you the facility of investing in mutual funds. They help you through the entire process of investment. These intermediaries will provide you with all the information, documents needed, help you to fill and submit the form and other documents to the respective fund houses and the purchase and redemption of your mutual fund schemes. If you have any online trading account for stocks, you can buy mutual funds through the same channel provided the broker offers such a facility. In addition, brokers also provide in-house research to help investors identify the best schemes and also allow a consolidated view of all their holdings.

Independent portals

There are also certain independent web portals that cater to mutual fund investors, allowing you to transact online at no extra cost. Most of the portals have tie-ups with banks to facilitate easy fund transfer at the time of investing. All you have to do is create an online account with them, after which you can get access to the entire mutual funds platform. These portals offer several benefits such as zero-cost advantage, tools to keep track of your holdings along with in-house research and analysis to help you build the ideal portfolio.

(By Rahul Agarwal, Director, Wealth Discovery/EZ Wealth)

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