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How to Buy Mutual Funds?

Just like there are many mutual funds schemes to choose from, there are many ways to buy mutual funds as well. With mutual funds, you have to think of long term investment as it is the best way to gain more returns. Hence, buying the right mutual funds is important. It is like getting the right kind of stocks to buy.

Different Ways to Buy Mutual Funds in India

So how to buy mutual funds which are right and gives you most returns? It is always better to have a diversified portfolio. A tip for a good portfolio. Have a fund strategy which includes mixed bonds and stocks fund as well as funds from national and international markets.

Besides, one should also think of rebalancing the strategy each year. During the technology boom in 1990, people who did not rebalance got affected by the collapse in 2000. Those who rebalanced suffered fewer losses and handled their losses better.

Below are some of the different ways to buy mutual funds.

Direct Plan:

These plans are ideal for someone who does not appoint a distributor and have a lower expense ratio as compared to the existing fund scheme of the Asset Management Company. This means, you as an investor will have a higher chance of earning better from your mutual fund despite having the same portfolio. But, it has disadvantages if the investor is not financial sound. The decision making might not be the right one. Hence, it is better to involve a fund manager.

Involving intermediaries:

All the intermediaries like banks, online brokers, financial advisory companies have to be registered with Association of Mutual Fund in India (AMFI). The Association of Mutual Fund in India (AMFI) has an online directory which provides you a list of intermediaries which allows you to buy/invest in mutual funds.

How to buy mutual funds online?

Online mutual funds allow you to do all the transaction sitting at home. So, how can one buy mutual funds online? No need to get confused as below are the best 4 ways to get mutual funds online.

Mutual Fund Company Website

In today’s time, all the mutual fund companies give the option of online investment facility. You can visit their website to buy mutual funds online. There are a few pros and cons with this kind of investment. The major disadvantage is each house will need registration with a separate id and password. Although once you register with fund house, investment becomes easy.

Independent Mutual Funds Portals

The online portals allow you to invest in mutual fund scheme as they give basic research about the mutual fund schemes.

Online Brokers

The online brokers are also the same distributors who also work as share brokers. The advantage with online brokers is that one need not have KYC for each fund house.

Bank Website

The banks also sell mutual funds, especially with their group companies. If investing with banks, one does not need to have a KYC again. The investors can buy mutual fund online with the online banking platform. But, buying from the banks is not a good idea as they push the schemes of their group companies.

How to choose a mutual fund and start investing?

After deciding how to make your investment, you must decide on the kind of mutual fund that suits you best. In order to do so, you must consider the risk tolerance appetite in case of loss of funds.

All the major company websites might have different trading platform, but all operate in the same way. In order to know how many shares, you own, wait for the NAV to be calculated by the end of the day. Generally, it takes 2-3 days for a trade to officially settle. The websites of the brokerage firm share the information about how long it takes the trades to settle. Although SEC requires that it should not take more than 3 days to settle.

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