Since the introduction of direct funds, there has been a substantial change in the mutual fund industry. Gone are the days, when you had to pay commissions or charges to middlemen such as brokers and distributors.
Direct investment in mutual funds implies that there are no distributor commissions to pay when investing in these funds because you deal directly with the Asset Management Company (AMC).
Let’s check out further how to invest in direct mutual funds online and its pros and cons.
How to Invest in Direct Mutual Funds Online?
Let’s examine how to invest in direct plans of mutual funds online. Here are the steps you should follow to invest in direct mutual funds:
1. Download/Access Mutual Fund Investing Platform
The first step is to start by picking a reputable app or website like Dhan. Select the app that is most convenient for you from a lot of available options.
Once you’ve decided whatever platform works best for you, you may browse the website or download the mobile app.
2. Complete Your KYC
Next, you finish the KYC registration process, for which you will need to provide the required paperwork, such as an Aadhar card and a PAN card.
Here, your PAN matters because all mutual fund companies verify whether your KYC information is associated with your PAN.
For a faster process, many platforms offer paperless or Aadhar-based e-KYC.
3. Pick a Direct Fund
Once you are done with the registration process, now comes the fun part – picking a fund where to invest your money.
Now to choose the right direct fund, look for consistent long-term performance of the fund along with their expense ratio and fund manager experience.
Most online platforms offer comprehensive information and research tools to help you make informed decisions.
4. Start Investing
It’s time to invest your money after picking the fund of your choice. There are two ways to go about this: a small sum on a monthly basis – called SIP or a large amount all at once- known as a lump sum.
SIP promotes disciplined investment and lessens the effects of market volatility by allowing you to invest a set amount at regular times.
However, lump-sum investments require a significant upfront payment and are suitable only if you have large funds available.
Steps to Start SIP in Direct Funds
Here are steps on how you can start SIP in a direct fund.
1. Determine the SIP amount
If you intend to invest regularly, determine how much you wish to invest each time. The minimum SIP amount is Rs. 100 a month.
2. Choose SIP Duration
Decide how long you want to keep the SIP going. To take advantage of the compounding effect, you should choose to invest for a longer period and choose how often you want to put in money – every month, every three months, or once a year.
3. Select Payment Method
Once everything is confirmed, hit the enter button, and you’re done! The funds will be taken out of your linked bank account automatically, as per your selected payment method.
Steps to Invest Lump Sum in Direct Funds
If you want to make a lump sum investment, here is how you can do it.
1. Select a fund
You need to first select a fund which is right for you and helps you in achieving your goals. Verify its past performance, pricing, and compatibility with your goals before buying.
2. Choose the Lump Sum Amount
Choose how much money you wish to contribute in a single payment. Consider your objectives and your financial situation before investing.
3. Payment
Use the linked bank account to invest by going to the payment section. Various payment methods, such as net banking and online payment gateways, are usually available on mutual fund platforms.
Pros & Cons of Investing in Direct Funds Online
Now let’s have a look at the pros and cons of investing in direct mutual funds.
Pros of Direct Funds
Online direct mutual fund investing has many advantages for investors. Here are a few main benefits:
Cost-effective
Direct investing allows you to keep more of your money in your pocket because you don’t have to pay intermediaries any additional fees or commissions. Additionally, they have a lower expense ratio if compared to regular funds.
Higher Returns
Direct mutual funds have the potential to offer larger returns due to their reduced expense ratios. Even a small percentage of savings can lead to high savings, improving the performance of the portfolio overall.
Flexibility and Convenience
Purchasing direct mutual funds online is a simple and convenient process. Using online platforms, you can effortlessly explore different funds, make investments, and keep an eye on your portfolio from any place.
Cons of Direct Funds
There are also some disadvantages of investing in direct funds like:
Lack of Professional Advice
Brokers and financial advisors do not offer suggestions or advice to direct investors. This means you have more freedom, but it also forces you to rely on your own due diligence and market knowledge.
DIY Method
Direct investing necessitates a do-it-yourself (DIY) methodology, which may not be appropriate for all investors. In their early years of investing, you require guidance and support. In times of trouble, only a mutual fund advisor or expert can reassure you.
Conclusion
Hope we have the answer now on how to invest in direct mutual funds online. Investing in online direct mutual funds is similar to managing your own finances.
It’s simple when you follow the above-mentioned steps. As technology continues to evolve, purchasing direct mutual funds online can help you with wealth creation.
FAQs
Can I buy direct mutual funds online?
Yes, a variety of mutual fund investment platforms like Dhan allow you to purchase direct mutual funds online.
How to invest directly in mutual funds without a broker online?
Direct mutual fund investments can be made through the asset management company or mutual fund aggregators.
Select a trustworthy platform, finish the Know Your Customer (KYC) procedure and start investing.
Can I buy a direct mutual fund through Dhan?
Yes, Dhan is a popular discount broker, which allows you to invest in direct funds with a variety of mutual fund options.
How do I start SIP in MF online?
To start SIP online, decide the SIP amount you want to invest along with the frequency. For smooth transactions, link your bank account to the mutual fund platform.
📌 You can also read:
- 10 Best SIPs for 3 Years Investment
- 10 Best SIPs for 1 Year
- What is a Direct and Regular Mutual Fund?
Happy Investing 💰
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.
