How to invest in Mutual Funds – Step-by-Step Guide

Published On: 08-Jul-2019

Mutual funds offer you a wide range of investment options across the asset classes, be it equity or debt, and even within the sub-categories of asset classes like mid-cap stocks, large-cap stocks etc. If you are wondering regarding how to invest in mutual funds, this article aims to address that question for you and list down the ways to invest in mutual funds. The investors can invest via two modes: offline and online. We will discuss both the modes one-by-one. 

How to invest in mutual funds

Investing in Mutual Funds through offline mode

This is the traditional mode of making investments in mutual funds, wherein the form is submitted physically and thereafter the entire data is digitized and processed. Here are the steps to invest in mutual funds through offline mode:

  1. Fill the KYC (Know Your Customer) form along with the application if you are investing in mutual funds for the first time. KYC serves as your information repository for the mutual fund house and is required for making investments more than Rs. 50,000 in a year.  

  2. Fill the application form of the desired mutual fund schemes, where the investment is to be made. This application form can be downloaded from the website of the respective mutual fund house or procured from the investor service center of the mutual fund or the Registrar and Transfer Agent (RTA).

  3. You can also choose to register for a SIP or Systematic Investment Plan, which allows you to invest a fixed sum every month into the mutual fund scheme of your choice. 

  4. Submit the application form along with necessary enclosures/cheque at the authorized collection centers of the mutual fund or the Registrar and Transfer Agent (RTA).

  5. A time-stamped acknowledgment will be provided you at the time of submission.

  6. On the next working day after the submission, you will receive a transaction confirmation message on your mobile number and the account statement with the transaction if you have also provided your email address. 

Investing in Mutual Funds Online

With the advent of digital banking and digital investing, it has now become possible to make an investment in mutual funds online with just a click of a button and there is no need to physically visit the mutual fund house to make investments. While the steps may slightly differ with different website structures of the respective mutual fund house, the procedure below aims to broadly outline the steps of making online investments in mutual funds:

  1. Open the website of the mutual fund house, in which you wish to make an investment. The Registrar and Transfer Agents (RTA) like CAMS, Karvy etc. also allow making investments with their clients’ mutual funds through their websites/ mobile apps. 

  2. Click on the ‘Make a Transaction/ Purchase’ button on the homepage of the website.

  3. The first page will prompt you to input your PAN (Permanent Account Number). Once you enter the PAN number, the system will validate the same against the present database to check if you are an existing investor and if you have completed the KYC form. 

  4. If you are a new investor and are yet to complete your KYC, the browser will redirect you to process your KYC verification online itself. Once you have completed your KYC, you can continue with your investment process.

  5. The online portal will prompt you to input the details one-by-one starting with the scheme details, investment amount, bank details etc.

  6. Once you have entered all the details, the portal will check if you want to make a lumpsum investment or SIP investment. In case of SIP, further details like number of installments, monthly SIP date, SIP amount etc. will also be required to be entered. Further, once you input the details for SIP registration, you will receive a SIP Registration Reference Number, which you need to further register for automatic bill payment with your bank through the netbanking login.

  7. After you have entered the desired details, the system will redirect you to the payment gateway where the payment is required to be made towards the investment. 

  8. Upon successful payment transaction, a transaction confirmation will be displayed on the screen with the time stamp. An email is also sent to the registered email address with the transaction confirmation, followed by the account statement.

So, now that you know how to invest in mutual funds, take your first step towards investing right away.