How to invest in direct mutual funds?

Making mutual fund investments via a ‘direct plan’ allows you to save on commission and increases your investible value.

How to invest in direct mutual funds

Mutual funds are a very popular investment option today. They are versatile enough to meet your varying financial objectives and are easy to invest in. And you don’t really need a broker or an intermediary to make mutual fund investments; applying for a ‘direct plan’ allows you to save on the commission and increase your investible value.

If you know where you want to put your money, you could choose the offline or online mode to make your investments. Here’s how:

Related: Dummies Guide To Mutual Funds

How to invest in direct mutual fund online?

Taking the online route is a convenient as it gives you ready access to investments via websites and dedicated apps. You have to first make an account either directly with the Asset Management Company (AMC), a  Registrar and Transfer Agent (RTA) such as CAMS and Karvy which are two of the largest RTAs, or a digital advisory platform, and upload your KYC and bank details. Most digital platforms will ask you to validate your email ID and phone number via OTP. You may also be required to upload a scanned copy of your KYC documents and a cancelled cheque leaf to verify bank account details.  

The online investment process is guided through click-and-select options. Remember to select the ‘Direct’ option under ‘Plan Type’. When the transaction is completed, you will receive a confirmation via email and SMS. Once the first investment successfully goes through, you will be allotted a unique folio number that can be used to make subsequent investments via either offline or online channels. 

Alternatively you could also register with broking firms and investment aggregators such as 5paisa and Zerodha that allow you to invest in direct plans of various fund houses without having to register separately with each AMC.

Related: Types Of Mutual Funds And How To Start Investing In Them

How to invest in direct mutual fund offline?

Visit the nearest office/branch of the AMC whose fund you wish to invest in. To find the closest representative office, go to this link provided by the Association of Mutual Funds in India (AMFI). From the drop-down menu, select the AMC and your city for the address and telephone number of the offices accessible to you.

Alternatively, you could invest through CAMS and Karvy as they have most of the AMCs registered with them. These RTAs collect and process mutual fund investments on behalf of the respective mutual fund company. While CAMS has over 280 branches listed here, Karvy has about 900 offices across India available here that you can visit to make a physical application.

As a first-time investor with an AMC or RTA, you have to complete KYC formalities with every fund house you wish to invest in. You will need a copy of your PAN card, address proof, duly filled common application form or SIP form, a NACH (National Automated Clearing House) mandate for auto-debit of the SIP, and a cheque or demand draft for the initial investment amount.

Should you add direct mutual funds to your investment portfolio? Read this piece to know more about. 


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