What to Know About Investing in Mutual Funds Online

The pandemic has led to more people trading and investing online. The chance to capitalise on market volatility and the ease of signing-up with a financial company is some reasons behind this trend. Online mutual funds have also become popular, as investors seek to build long-term financial security.

However, investors need to be well-versed with a few factors beforehand. For example, you must understand your risk tolerance. Further, explore various mutual fund schemes well to get the best out of your investment efforts. Here’s what else can be helpful.

Mutual Fund KYC

KYC for mutual fund is a customer identification process made mandatory by SEBI. It has been introduced to prevent fraudulent and anti-money laundering activities. KYC (Know Your Customer) process is conducted by all financial institutions to stay compliant to regulatory standards.
You will have to provide your name and important details as per original documents.  Further, do make sure there is no history of payment defaults. Provide details accurately. Fill the form online with your fund house and upload the necessary documents to get started.

Types of Funds

Before completing the KYC for mutual fund, you must understand the various types available online. This way you invest in the right one to tick off your goals. The basic ones are:

  • Equity Funds: This will mainly invest in stocks. You can start parking your money through a SIP or a lump sum amount.
  • Debt Funds:  This invests in securities that generate fixed income. For example, commercial papers or government securities.
  • Gold Funds: These mutual funds invest in different types of gold; gold mining company shares for example.
  • Liquid Funds: The main investment area is high-quality instruments that mature within the next 3 months.

How to Start Investing in Funds?

The first step to purchasing an online mutual fund is to pick a reliable AMC or Asset Management Company. Read about the pricing, history of regulation and the credentials of the asset manager. You should also check their online management team and whether their mobile interface is secured. Taking care of these is a strategic decision and can help you protect your capital in the long-term. Look at the next steps:

 Step 1: Head over to the official website of the company. Here you can see a list of different fund schemes. Analyse your risk profile, current financial condition and future goals. Pick one accordingly. The KYC process must be completed beforehand. Once the verification is done, you can get started.

Step 2:  You can also start with the mobile application of your fund house. The best one is available for both iOS and Android users. You can easily choose a plan, track your portfolio online or start an SIP without hefty paperwork. In fact, you can also redeem your investment without any hassle.

Before selecting the mutual fund online, do check the exit load, expense ratio and AUM (Assets Under Management). Try not to choose a scheme based on recent performance. Lastly, do work with professionals to make sure you make an informed choice.

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