Mutual funds are becoming increasingly popular in India due to their attractive and high returns. The Indian mutual fund industry has registered a more than 4½ fold increase over a period of 10 years – from an Average Assets Under Management (AAUM) of Rs. 5.09 trillion on February 28, 2009, the industry has grown to an AAUM of Rs. 23.16 trillion as on February 28, 2019. This exponential pace of expansion is a validation of acceptance of mutual funds as one the best investment products. Here’s how you can also invest in mutual funds online and earn potentially high returns subject to the involved market risks.
How to Invest in Mutual Funds Online?
You can quickly and easily invest in mutual funds online following the below-mentioned 5 steps:
Step 1: Visit the website of any of the following:
- An asset management company (AMC) i.e fund house such as SBI Mutual Fund, Reliance Mutual Fund, etc.
- A RTA (Registrar and Transfer Agent) such as CAMS and Karvy.
- A registered investment adviser (RIA) such as Paisabazaar where you can compare the mutual fund schemes of all the fund houses on a single platform.
- A third party mutual fund distributor.
Step 2: Complete the e-KYC
In case you are a new investor, the next step in the process is completion of KYC (Know Your Customer) formalities. You may download an e-KYC form the website of any of the above-mentioned authorities. To complete the KYC process online, you will be required to digitally submit the self-attested copies of the following documents along with the KYC form:
- An identity proof (Aadhaar card, Passport, Voter ID, or Driving Licence)
- PAN card
- An address proof
- A passport-sized photograph
Step 3: Complete In-Person Verification (IPV)
After completion of the KYC process, every investor is required to complete the In-Person Verification (IPV) process. The completion of the IPV procedure has been made compulsory by capital market regulator SEBI (Securities and Exchange Board of India) from January 1, 2012. The IPV process can be completed in two ways. You can either visit any of the following institutions and submit self attested copy of the above-mentioned documents which you submitted for e-KYC:
- KYC registration agency (KRA) such as CAMS/Karvy Office
- AMC (fund house)
- Mutual fund agent/distributor
Alternatively, the IPV procedure can also be completed via a video conference using a webcam with any of the above-mentioned authorities at a pre-agreed time. The completion of IPV usually takes 5-6 days after the in-person visit.
Step 4: Select a mutual fund scheme to invest in
This is the most crucial and important part of the process which will guide your future return on investment. It is important to remember that the best mutual fund scheme varies from person to person on the basis of investment time horizon and risk appetite. Other factors which you must keep in mind while selecting a mutual fund scheme are – consistency of the scheme’s performance, the scheme’s performance against its benchmark and among its peers, the experience of the fund manager managing the scheme, the track record of the fund house, expense ratio, etc.
Step 5: Submit the mutual fund application form
After you have selected the mutual fund scheme which best suits your financial goals and risk appetite, the final step is the submission of the mutual fund application form and making the payment of the investment amount. If you wish to invest via a SIP (Systematic Investment Plan), you need to fill and submit a SIP form along with the application form.