How to open a mutual funds account

Ever considered investing in mutual funds? If you're at a stage in your life where you are seeking more than one savings/investment option, then you should probably consider opening a mutual funds account.

Mutual Funds Key Features

  • Extremely convenient

  • Well-diversified

  • Require low investment

  • Provide tax benefits under 80C

  • Come with professional management.

Concept of Fund Manager

Yes, that's right! Your mutual fund is handled by a professional fund manager who can access your portfolio and allocate your assets accordingly to help generate maximum returns for you. A fund manager comes with in-depth knowledge and expertise of market understanding and also has a team of researchers at his disposal who help him manage these funds.

How to Open a Mutual Funds Account

Opening a mutual fund account might seem complicated but it is very easy if you are aware of the process. If you are investing in mutual funds for the first time, you should do your research, know every step to take before you go ahead and invest.

Steps to Opening a Mutual Funds Account Online in India -

  • Register with an AMC -

    As a first-time investor, you can identify a suitable Asset management company and invest in a mutual fund online. Usually, these AMC websites are extremely user-friendly and contain clear steps on how to make these investments seamlessly.All you need to do is fill an application with your personal details and investment details, make the payment, complete your KYC with sufficient proof of identity and address and submit everything. Your account will be created within a few hours of doing so depending on how fast the AMC processes it.

  • Invest in mutual funds through a Demat account

    Did you know that you can invest in mutual funds through a Demat account? A Demat account essentially is like a central repository that holds all your investments in one place. In India, NSDL and CDSL are the two depositories that govern all the Demat accounts. The added benefit of investing in mutual funds via a Demat account is that it is way more secure than a trading account and the chances of fraud, theft and any other form of malpractice are way lesser. It's relatively easy to open a Demat account with any large stockbroker listed on the BSE and NSE. All you need to do is identify a reliable depository participant, fill the application form, provide your PAN details, submit any additional documents and voila! Most of them require an in-person verification as well after which you're provided with your account details through which you can keep a tab of all your investments.

  • Sign up with independent players -

    Many companies in the BFSI space have identified that there's a lack of sufficient awareness on the topic of investments. These aggregators offer more than just an option to open a mutual fund account online, they offer expertise, in-depth analysis, and comparison on different mutual fund schemes and also waive off the transaction charges. Opening an account with them is extremely hassle-free and non-laborious. By filling an application form, finishing your KYC, submitting your PAN details along with address proof, you'll be given login credentials to your account on the portal which you can use to make investments in mutual funds.

Things to Consider as a First-Time Investor in Mutual Funds

Along with the above-mentioned steps of how to open mutual fund account, here are a few things you should consider looking into if you're a first time investor -

  • Identify your financial goals

  • Decide on your investment amount

  • Pick the right kind of mutual fund depending on your goals

  • Diversify your portfolio

  • Be KYC compliant

  • Pick SIP (Systematic Investment Plans) instead of making lump-sum investments

  • Seek advice from your fund manager or a mutual fund expert to make better investment choices

  • If you're inclined towards online investments, open a net banking account if you don't already have one. Making investments through cheques, DDs every time can get cumbersome and also time-consuming. Online transactions are faster and more efficient.

As a first-time investor in mutual funds, you must understand that while mutual fund investments are the talk of the town and are extremely viable as a savings option in today's times, they also carry the standard market risks since they are heavily dependent on the market performance. Hence, you must choose carefully and must be thorough with the nuances of investing in mutual funds.