How to invest in mutual funds?
Explore the different ways in which you can invest in a Mutual Fund
- You can buy mutual funds online or through a mobile banking app.
- You can invest a lump sum or choose a Systematic Investment Plan.
- You will need to update your mutual fund KYC before you can open a mutual fund account with your bank or AMC (Asset Management Company).
- For seamless and paperless investments download the digibank app.
- Choose ‘Mutual Funds’.
- Complete your verification through simple instructions.
- Start investing!
Be it a savvy investor with a knack for reading the market or a beginner; mutual funds work well for everyone. The inherent diversification, easy liquidity and tax-savings (for some) features, have made them extremely popular.
Please continue reading to understand how mutual funds work, and the different ways to invest in them.
How do mutual funds work?
When multiple investors pool their money to buy units of a particular asset, it’s called a mutual fund. These assets could be equities, commodities, bonds, money market instruments, or other securities. Every portfolio is composed of these securities to align with the schemes’ financial objectives.
Issuing fund houses, banks or AMCs (Asset Management Companies) manage these funds through expert fund managers. The Securities and Exchange Board of India (SEBI) regulates these funds. Every issuing entity (bank, fund house, brokerage or AMC) must be registered with SEBI.
Next, let us look at how you can invest in mutual funds and start working towards a financially secure life.
Ways to invest in mutual funds
Do you have a substantial amount saved up? Or have you decided to invest a regular amount each month to secure your post-retirement years financially? You can choose two ways to invest in mutual funds:
Here, you can make a one-time payment to buy a certain number of mutual fund units. You can choose lumpsum if you have a sizeable amount to invest.
Systematic Investment Plan (SIP)
Here you can choose to invest a particular amount at regular intervals in the same mutual fund. It is an automated process where the SIP amount is debited from your bank account at the time of the SIP payment.
Let’s illustrate both methods of investing in an example. Ajay just sold his property in his hometown and received Rs. 50 lakh. He chooses to invest about Rs. 5 lakh in a mutual fund. On the other hand, Ajay’s colleague, Zara, decides to invest Rs. 10,000 each month from her salary into a mutual fund. Zara will continue her SIP for at least ten years.
You can choose either option to pay for your mutual funds investments. However, for equity funds like ELSS (Equity-Linked Savings Schemes), the SIP route may prove more beneficial to you. We have explained how in this article.
Now that you know how to invest in Mutual Funds, the next step is to ensure that you are KYC compliant. SEBI has made it mandatory for every investor to provide their identity proof and address proof to prevent fraudulent practices. Follow these steps to get your KYC done in no time:
- Apply for an e-KYC verification on your chosen fund house or asset management company’s website.
- Fill in the details such as your full name, contact number, email I.D.
- Upload the scanned documents when prompted.
- Complete the verification process.
That’s it; you are now ready to go on to the next step- investing! Investors can choose to invest in mutual funds online or offline. The online method is faster, paperless and signatureless. Follow these four easy steps to get started with digibank by DBS.
How to invest in mutual funds via the digibank app:
Step 1: Download the app.
Step 2: Choose ‘Mutual Funds’.
Step 3: Complete your verification through simple instructions.
Step 4: Start investing!
Save your time and energy by investing in Mutual Funds online. Download the digibank app to start the paperless process of creating your savings account and be one step closer to investing in Mutual Funds.
*Disclaimer: digibank offers Mutual Funds that are instant, paperless, signatureless – even transaction fee-less! What’s more? You get to choose from 250+ Mutual Funds across 15 top-performing asset management companies. So why wait? Login to digibank (app or internet banking) and start investing in a flash with instant Mutual Funds on digibank.
Read up more on Mutual Funds here.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing.