How to invest in mutual funds online?

Posted: 19 May 2011 08:24 AM PDT

I have been asked this questions lot of times. This question has become more relevant ever since SEBI has banned the entry load on mutual. Before answering this question we have to answer one more question, why more and more individual investors are trying to take the online route for investing in mutual funds.

Why investors are shifting to online investing?

This step of SEBI has made independent financial advisors (IFAs) to service individual clients. The advisors, if smart enough, can at the most earn Rs. 50 as upfront fees from an investor wishing to invest Rs. 10000. Earning this Rs. 50 will involve travelling, communication, time and knowledge. Hence many independent advisors have stopped distributing mutual funds. This is making it difficult for investors to execute transactions physically; hence many investors are shifting to online investing.

Why invest online – Advantages of investing in mutual funds online?

No Paperwork – You don't have to fill lengthy complicated forms, submit or get it submitted along with cheque, KYC forms and then wait for physical account statements to know the status of your portfolio. In online you can do all transactions effortlessly with a computer with internet connection and know the status of your account at any point of time.

Alteration at the click of a mouse – You can buy, sell and change the SIP amounts, etc. can be done very easily through online service providers.

Many options under single platform - The biggest benefit of online mode is the ability to invest in multiple funds of different AMCs from one platform and even track the performance by having a single portfolio.

Research Support – get expert advice, research reports, financial calculators, portfolio management services as value add services.

Now the basic and original question with which I started the article with –

How to invest in mutual funds online?

There are various ways you can do this. I am mentioning few of them below –

Independent websites – There are sites which offer online investing services across AMCs. fundsindia.com and fundsupermart.com are two such sites.

Share Brokers – icicidirect.com, sharekhan.com, indiainfoline.com, etc. in addition to stock broking also offer online services for investment in mutual funds. Onetime registration by doing the necessary paperwork is required.

Mutual Fund Websites – You can invest in through each mutual fund's website also. However, there are two major problems – Firstly, for the first time you have to fill up a physical application form and then you can do future transactions under the same folio number. Secondly, you have to register with each mutual fund separately.

Having said all this, many investors still hesitate to invest online and are comfortable having face-to-face interaction with the advisors. If you are one of them then ignore this article, otherwise let me know your views on this by posting comment below.

Author – Vineet Patawari