Mutual fund investments have grown substantially in the recent past. Many factors, such as higher disposable income
and portfolio diversification, have prompted investors to add mutual fund schemes to their investment portfolios.
You can also invest in mutual funds to leverage its benefits.
Fortunately, there are several ways to buy mutual funds, each of which has unique benefits. Let’s explore a few common ways to invest in mutual funds below.
How to invest in mutual funds?
You can invest in mutual funds with a lump sum investment or a Systematic Investment Plan (SIP). In the former, you invest in mutual fund schemes by investing a lumpsum amount at once. Meanwhile, with SIPs, you can invest in mutual funds regularly with small investments. The following methods to invest in mutual funds offer the option of lump sum investment and SIPs.
1. Invest directly through the fund house
Mutual funds are offered by Asset Management Companies (AMCs). These institutions pool money from several investors and invest it in equities, bonds, and other assets. AMCs provide investors with the opportunity to invest directly through them. You can do this online through an AMC’s official website or by visiting its branch offline. Most AMCs also have their mobile apps that make your investment journey easier.
Investing directly through the fund house is one of the best ways to buy mutual funds because you can opt for a direct plan. Direct plans are more cost-effective because they have a lower expense ratio. The expense ratio means the cost of managing mutual fund investments. AMCs charge this amount from all the participating investors. Since direct plans are purchased directly through AMCs and not through intermediaries, they have a lower expense ratio.
Hence, if you know the type of mutual fund you want to invest in, investing in a direct plan through the AMC is an excellent option.
2. Invest through an online investment platform
With the numerous online platforms, investing in mutual funds has become easier. Online platforms are popular because you can invest in funds of various AMCs through a single online platform. Register with your preferred online investment platform and begin investing in mutual funds that align with your financial goals and risk profile.
3. Invest through a distributor
Distributors give recommendations to their clients on which schemes to invest in and handle the process of investing. However, this may be a comparatively costlier way of investing in mutual funds because you invest in regular plans with a higher expense ratio, including the agent’s commission and additional charges.
If you are new to investing and believe you need some initial guidance, you can consider this option. But ensure you check the scheme details, risk profile, and investment goals.
4. Invest through CAMS and Karvy
Another way to invest in mutual funds is through Computer Age Management Services (CAMS) and Karvy. They are India’s leading mutual fund registrar and transfer agents. Each has a seamless online platform to help you invest in the mutual funds of your choice. Alternatively, you can visit their nearby offices to fill out the application form and submit the KYC documents and a cancelled cheque.
Flexibility is the hallmark of mutual fund investments. You have the freedom to choose the funds, your investment amount, your time horizon, etc. Additionally, you can select the method to invest in mutual funds. You can try multiple ways of buying a mutual fund and figure out which one suits you the best. For instance, you can try investing in one fund through an AMC and another fund through an online investment platform.
While every method has unique features, investing in mutual fund schemes through an AMC can be beneficial. It is direct and cost-effective. However, ensure that when selecting the method to invest in mutual funds, you have the freedom to track your fund’s performance and the benefit of buying and selling conveniently.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
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