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How To Invest In Mutual Funds: Explained In 7 Easy Ways

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A cushioned entry is necessary towards the stock market, making numerous investors consider mutual funds. Mutual funds are popular among investors as they offer diversification opportunities and spread risk over several securities or asset classes. 

Numerous retail investors are attracted towards mutual fund investments as they allow them to take advantage of professionally managed funds, tax rebates, and flexible modes of investments (lump sum or Systematic Investment Plans). The total number of mutual fund folios stood at 13.98 crores which include the maximum investment from retail investors, i.e., around 11.18 crore as on November 30, 2022. The Assets Under Management (AUM) of the Indian Mutual Fund industry, which touched INR 40,37,561 crore, have grown more than 5-fold within 10 years. 

Continue reading easy ways for mutual fund investing.

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7 Ways to Invest In Mutual Funds

Investors can take advantage of mutual fund investing with the help of a financial intermediary, like, the Association of Mutual Funds in India (AMFI) -registered mutual fund distributors or invest directly using their demat accounts or Indian stock market apps. The seven ways to invest in mutual funds are explained below:

  1. Asset Management Companies (AMCs) 

Individuals can invest directly with the AMC. They can take an offline route by visiting their office or investing online at their official websites. In both ways, investors need to submit their KYC (know your customer) documents. If investing online using their portal, there are direct plans for experienced investors who understand financial markets. Otherwise, regular plans can be considered. Direct plans can provide higher returns than regular plans.

  1. Mutual Fund Distributors

Investors can approach mutual fund distributors registered with the AMFI and provide mutual fund guidance and transactions. These distributors do not charge huge fees from investors as they get commissions from the fund house. However, the cost of mutual fund units under regular plans is higher than direct investments through AMCs. Novices in the stock market can understand their risk appetite with the help of these distributors. They put the interests of investors over their interests and provide unbiased financial advice following the AMFI’s Code of Conduct. 

  1. Registered Investment Advisors (RIA)

Investors can consider Registered Investment Advisors (RIA) with the SEBI (Securities and Exchange Board of India). Typically, AMCs do not pay commissions to RIAs and they may charge fees from investors for their services. Investors need to do their own research for legal issues if considering RIAs to invest in mutual funds.

  1. Registrars and Transfer Agents (RTAs)

Another option is approaching RTAs helping investors with mutual fund trades on behalf of the fund houses. Investors need to know first which RTA is assigned by the AMC to provide its services. Then, individuals can refer to the RTA websites to choose a plan. They can visit their offices also.

  1. Demat Investing with Stock brokers

Stockbrokers are also AMFI-registered mutual fund distributors. Investors can open a demat account with a stockbroker offering online demat and trading services. Using a demat account individuals can make investments in mutual funds, generally regular plans.

  1. Banks

Many banks are also mutual fund distributors. They provide wealth management services to their customers and enable them to invest in mutual funds. Investors can invest in regular plans via banking services. Customers can meet wealth managers in the bank branches or access their online mutual fund investment services.

  1. Mobile Trading Apps 

Investors can find many stockbrokers offering their mobile apps to trade financial assets. Most AMCs and RTAs also offer mobile apps that are limited to mutual fund investing. Using reputed discount brokers’ trading apps, individuals can find numerous mutual fund schemes. There is no need to visit different AMCs offices or their websites for the investment of redemptions. Download the best trading app with a discount broker offering affordable trading services from Google Play Store or iOS.

In this way, investors can invest in mutual funds. Select a suitable mutual fund scheme and opt for investing a lump sum or choose a SIP (Systematic Investment Plan) as per the financial goal and risk appetite. Make it more convenient with advanced trading apps of renowned brokers offering interactive charts for easy mutual fund schemes comparison and return prospects. 

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