How to invest in mutual funds with or without demat account?

Short Answer

Investors looking to invest in mutual funds without a Demat account can invest through financial institutions, independent financial advisors, AMC, and online portals.

Detailed Answer

Recently, a reader of ours asked a query on how to invest in mutual funds so we thought to bring up a write up on that. So, how to invest in mutual funds with or without Demat Account. We will also explore on how to invest in mutual funds through various channels.

Investment into mutual funds have grown tremendously over the years and mode of delivery has also improved. Earlier where only large financial institutions and Financial advisers dominated the market but now there are many options to choose from. And, first-time investors get really confused on whom to approach to buy investment plans.

How to invest in mutual funds Without Demat Account

The First Thing

Those who are first time investor in a mutual fund need to possess certain documents which are compulsory. These include PAN Card, a Bank Account (should belong to the investor), a cheque book and should be KYC (know your customer) compliant. These are the basic documents one needs to have if they are investing in a mutual fund. Those investing through online should have a proper digital payment mode.

For the first time investors, it is normal to not be a KYC compliant. To be a KYC compliant individual, he/she needs to submit the KYC application form with following documents to the financial advisor or fill e-KYC (if doing online) to get registered.

  • A recent passport photo
  • Proof of identity (Aadhar, Voter ID & Passport or documents notified by govt.)
  • Proof of address (Aadhar, Electricity Bill or documents notified by govt.)

Those who have completed the process earlier can check the status through this website.

Different Channels for investing in a Mutual Fund

Through Financial Institutions

There are wide range of financial institutions that offer mutual fund service. These include Banks, stock brokers and distribution companies. These institutions are required to have registration with AMFI (Association of mutual fund of India) to be eligible to offer the services.

Independent Financial Advisor (IFAs)

IFAs offers personalised investment service to the investors. This ranges from investment consultation to managing the portfolio. IFAs act as an agent for the Asset Management Companies(AMC) and sell it to the customers. AMC pays IFAs commission on the sale of every mutual fund schemes. These commissions are included in the mutual fund expense ratio.

Directly from Asset Management Companies (AMC)

An investor can directly approach the asset management companies (through office or online) to make an investment in the schemes. Investing directly through AMC gives you the benefit to invest in direct plans which is not available with the Financial Institution and Independent Financial Advisors.

Also read How to invest in direct mutual funds

Through Online Portals

Nowadays, Mutual fund services are also offered through third party online portals. These online portals can be hosted by private players or govt. backed institutions. These portals have to be mandatorily registered with AMFI, in order to provide the services. Following are the list of important online portals through which you can invest in mutual funds.

MFUtility

CAMS and KARVY portal

Recently, many mobile wallet companies including Freecharge and Paytm, have started to offer financial services in their platform including mutual fund and insurance, but it is better to wait for the platform to mature enough.

Investing in mutual funds With Demat Account

An investor can also make investment in mutual fund through their Demat Account. For this, the investor needs to place an order with the broker he/she is maintaining account with. The investor needs to provide all the details of scheme he/she interested with and the amount will get deducted from the bank account linked with the Demat Account.

All the unit purchased gets credited into the Demat Account. It helps the investor to track the investment portfolio easily without the fear of loss of units.

Investors investing through other channels other than Demat account can also transfer their mutual fund units to the Demat Account. The simple steps involved in to transfer the units are:

  • Obtain a CRF form from your Depository Participant (DP)
  • Submit the CRF form with details along with Statement of Account with the DP
  • After verification of the form, your DP will send it to AMC/ Registrar for further process

After the verification of details by AMC/ Registrar, the transfer of all units will be executed by the DP and will get credited in your account

Conclusion

As we have discussed various options to invest in the mutual fund in details, it is better to know which platform is suitable for which type of investors. Those investors who are investing for the first time in the mutual fund and those who have limited knowledge on the subject should opt for consultancy based options like Independent financial advisors, Financial institutions and online portal like bodhik who can help in making the investment plan more effectively. The seasoned investor can opt to invest directly through AMC, MFutility. The segregation is only for the knowledge purpose and investor can choose any platform according to their need.

Tagged With: mutual fundsinvest in mutual fundsdemat accountinvesting
Categories: Mutual Funds
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Discussion (1)
    Online demat and trading account is a pre-requisite for availing different services from reputed stock brokers. The process of investing has become much simpler owing to the online platforms. For investment in mutual fund demat account is not required. Minimum you require PAN Card, Bank Account on your name and Address proof. Things have become much easier as compared to earlier years. Less paperwork and online uploading of documents saves a lot of customer's time. We can also access our online demat and trading account easily. All you need is a computer and a good working internet. I mean, we can invest, trade and also view our portfolio online. It's just that easy!
Related FAQs
Is Demat account required for Mutual Funds in India?

No, a Demat account is not required to invest in mutual funds in India. Instead, there are a number of other options, such as Asset Management Companies (AMCs) or offline distributors through which you can directly invest in mutual funds without opening a demat account.

What are the types of Fund of Funds?

Similar to traditional Mutual Funds, Fund of Funds are professionally managed funds that are available in multiple types. Some of the types of FoFs are Gold FoFs, ETF FoFs, International FoFs, Multi-Manager FoFs, and Asset allocation FoFs.

Can NRI invest in Mutual Funds in Zerodha?

Yes , NRI can invest in Mutual Funds in Zerodha by opening a non-PIS account. However, there are restrictions for NRI investors with PIS accounts, as well as investors based in the US and Canada; they are not permitted to invest in mutual funds in Zerodha.

Can a retail investor buy Government Securities?

Government securities include both T-Bills (Treasury Bills) and Government bonds which are both short and long-term instruments issued by the Central & State governments for various purposes. Retail investors are allowed to invest in G-Secs provided by the RBI. One can buy them directly from the Stock exchanges in a non-competitive method.

Can foreign nationals invest in Indian Mutual Funds?

Yes, foreign nationals can invest in Indian mutual funds. They can either invest by direct route, which requires them to open a demat account, or by indirect route through Unit Confirmation Receipts (UCR).

Which is better Zerodha or Groww for Mutual Funds?

Zerodha as well as Groww, both allow investors to invest in Mutual funds. Groww does not charge any Account opening fees or Annual maintenance Charges but Zerodha charges Rs 200 for Account opening and Rs 300 for AMC. This makes Groww a cheaper and better option when it comes to investing in mutual funds.

How to Invest in Index Funds in India?

There are several options to invest in index funds. It can be done through online portals, agents, demat account and AMC website.

Is Groww App Safe for Mutual fund and Stock Investing?

Yes, Groww app is completely safe for mutual fund, stock investing and trading. As a popular mutual fund investment plaftorm, Groww established itself quite well in the past few years. Now, it has also enetered the stock broking space so it's really good to see new entrants amid existing top discount brokers in India.

Can I Invest in Stocks through Groww App?

Yes, now you can easily invest in stocks through the Groww App. It is a popular discount stock broker firm in India who recently expanded its services to the the stock broking arena. It allows traders to invest online without any subscription fees, transaction charges or any other charges.

Can I do stock trading in India without a broker?

To buy and sell stocks in the Indian stock market, you will need a demat and trading account. A stockbroker is necessary to trade stocks because the broker will provide the trading account through which you will place your trades.

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