Is Demat account required for Mutual Funds in India?
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- Updated On:20-Sep-2022
- Replies:1
Short Answer
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.
Detailed Answer
What are Mutual Funds?
Mutual Funds are collection of funds that are professionally managed by a fund manager. The manager allocates the assets in an effort to maximize investors' returns through income or capital gains. The portfolio of a mutual fund is set up and kept up to date in accordance with the stated investment goals in the prospectus.
How do Mutual Funds differ from Equity Investments?
- Investment type : Mutual funds are indirect investments where money is managed by a qualified fund manager, whereas an equity investment is a direct investment where you are directly responsible for the selection of stocks.
- Risk : Mutual funds carry a lower risk than equity investments, which carry a higher risk.
- Returns : Compared to mutual funds, equity investments offer higher returns.
- Investor type : Mutual funds are generally for everyone, or especially for people who don't want to take much risk, whereas equity investments are best suited for people with experience in the stock market.
Is Demat account required for Mutual Funds in India?
No, you do not need a demat account to invest in mutual funds in India. There are several other ways to invest in mutual funds without opening a demat account.
But if you also want to invest in stocks, ETFs, bonds, or other securities with mutual funds, then you must have a demat account.
Ways to invest in Mutual Funds without Demat account
1. Through AMC:
You can invest directly with the Asset Management Company (AMC) online or visit their office. You need to submit your documents for KYC verification, and after that, you can start your mutual fund investments.
2. Online Distributors:
There are several distributors of mutual funds that provide entirely online services. One benefit of investing through an online distributor is that you can view your entire portfolio of mutual funds in one place.
3. Offline Distributors:
There are offline distributors, similar to online distributors, through which you can invest in mutual funds. However, offline distributors require a lot of paperwork, which is very time-consuming.
Demat account for Mutual Funds in India
There is no need for a demat account if all you want to do is invest in mutual funds. However, a demat account enables you to invest in mutual funds as well as other securities like stocks and bonds.
Additionally, demat accounts offer all of your investments in one place without requiring physical paperwork.
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Discussion (0)
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).
Investors looking to invest in mutual funds without a Demat account can invest through financial institutions, independent financial advisors, AMC, and online portals.
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.
There are several options to invest in index funds. It can be done through online portals, agents, demat account and AMC website.
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.
We all look to earn good returns on the money we invest. Putting money in High return investments is one way of generating better income. The different places to get good returns are mutual funds, equity, and gold investment in India.
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.
You can definitely trade or invest Rs 100 in Indian stock markets. There are no monetary requirements to enter the stock market hence you can buy any share that is trading under Rs 100. Apart from direct stock investing/ trading, there are some indirect ways to own shares over Rs 100. This can be done through Mutual Funds.
NRIs living in the United States can invest in Indian Mutual Funds, but there are some hassles that have to be overcome. You will require an NRE, NRO, or FCRN account in order to convert the foreign currency into Indian rupees, post which you can complete the KYC and begin investing in Indian Mutual Funds.
Yes, any NRI can invest in mutual funds in India, if they follow some certain conditions under Foreign Exchange Management Act or FEMA Act 1999.