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How To Invest In Mutual Fund SIPs Online? Research Team | Posted On Friday, September 07,2018, 11:35 AM

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How To Invest In Mutual Fund SIPs Online?



Mutual Funds are investments that are professionally managed. These funds pool money from a large number of investors and this money is invested in different asset classes. The investors can be retail or institutional. Some of the asset classes where mutual funds invest are: stocks, bonds, money market instruments and so on. 

Investors choose mutual funds based on financial goals and risk appetite. Before investing in mutual funds, an investor must be aware of his objectives like buying property, children’s education, marriage, retirement and so on. Even if there is no specific goal, have an idea on how much you expect in return from the investment.

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How to invest in mutual funds through SIP online?

Mutual Funds as compared to other investment avenues have several benefits.

1. Economies of Scale

As mutual funds are a pool of investments, they enjoy economies of scale that an individual investor would not have. For someone with limited resources, investing and managing a portfolio is highly impractical. This is where mutual funds provide an opportunity to come together and exploit new investments.

2. Professional Management

Mutual funds are managed by a professional who has knowledge and experience in the field. The investments are monitored regularly. Their expertise in analysing the market using advanced tools and technology can’t be replicated by an individual investor.

3. Risk diversification

Investments of any kind are made with certain expectations on returns. However, these returns carry a measure of risk that differs across classes. Mutual Funds are diversified investments and reduce the element of risk. Even though risk isn’t erased completely, it gets diversified to provide security to the investment.

4. Liquidity

Mutual funds are highly liquid and you can sell at any time. Normally it takes a day for the money to come to your account.

5. Choice

There are different types of mutual funds, each fitting different needs. You can put money in mutual funds that invest in stocks, or fixed income instruments, or a combination of the two. An investor can choose a combination that meets his requirements.

Investments in mutual funds can be made either through lump sum or through SIPs (Systematic Investment Plans). SIP is a method of investing in mutual funds that allows you to invest a fixed sum regularly in a mutual fund scheme of your choice. This sum is deducted regularly from your bank account and directed to the mutual fund. SIPs allow you to invest small amounts at regular intervals, instead of a one-time investment. The power of compounding plays a big role in SIPs as the regular investments yield a higher return in the long run.

Investing in Mutual Fund SIPs online

Before you invest in SIPs, you must be sure that you are KYC compliant, as per the Prevention of Money Laundering Act (2002), laid down by the Securities and Exchange Board of India (SEBI). For this, an investor needs to provide copies of the PAN, an address proof, age proof, cheque and photographs, which need to be self-attested.

You can get the KYC done online (e-KYC) by visiting the website of your mutual fund house, and, if they have a provision for e-KYC, follow the link and instructions. If not, visit one of the SEBI authorized KRA (KYC Registration Authority) websites like CAMS, CVL, Karvy and NDML and follow the procedure there. Both these alternatives need Aadhaar for verification.

 In-Person Verification (IPV) is another step to confirm the physical existence of a person. Traditionally, for completion of IPV, the investor had to visit the office of the broker or mutual fund house. Alternatively, someone would visit the investor at his home or workplace. These days, IPV is a simpler process done by way of video calling at a pre-agreed time. The officer will ask a few questions and the documents need to be produced on demand.

There are a number of mutual fund schemes to choose from, according to investment objectives, appetite for risk, budget and so on. Depending on these factors the investment is classified into different asset classes and schemes which give returns with corresponding risks.

 Once you have decided on the investment objective and are KYC compliant, you can log on to the website of any Asset Management Company (AMC) and register by filling out forms and providing bank details. Alternatively, you can also invest in mutual funds through Mutual Fund Apps or brokers by registering on their platforms.

SEE ALSO: 7 Best Mutual Fund Mobile Apps For Investing Online In India

Paytm Mutual Fund App

One97 Communications Ltd, the parent company of Paytm launched a new app (Paytm Money) on 4th September, specifically for investments in mutual funds. They offer Systematic Investment Plans (SIPs) starting at Rs 100 a month. As Paytm is registered with the Securities and Exchange Board of India (SEBI) as an Investment Advisor (IA), they offer only direct plans from around 25 Asset Management Companies (AMCs). Direct plans carry a lower expense ratio as they don’t have distributor commissions. According to Paytm, their app offers free registration, 0% commission, and up to 1% higher returns compared to regular plans.

Paytm Money had started accepting customer registrations for early access for the past month. Over 8,50,000 people have registered for early access. In case an investor wishes to skip the queue, they can opt to become “Investment Ready”. Paytm has a provision for the investors to complete KYC process on its app. The investor will need to provide the following details for this process:

  • PAN card
  • Personal Details (Name, D.O.B, Profession, Signature, Photograph and In-Person Verification (IPV) by uploading a video)
  • Address Proof (Aadhaar/Driving License/Passport/Voter card)
  • Bank Details (Account number, IFSC, Cheque/Account Statement)

Paytm has estimated that by 2023, around 50 million investors would have invested in mutual funds, of which, they plan to capture the majority of the market.

Currently, these are the types of mutual funds available on Paytm Money:

  • Equity – Funds invested only in stocks
  • Debt – invested in fixed income investments such as bonds, treasury bills, debentures and so on
  • Hybrid – investment in a mix of equity and debt
  • Tax Saver – equity mutual funds that provide tax benefits under section 80C. They have a lock-in period of 3 years.
  • Gold – investments in Gold ETFs

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