First of all, I would like to congratulate all of you, who have followed our last blog posts and make your mind to step into the investment journey. You are just one step away from fulfilling your life financial goals once you decided to invest in your first mutual fund scheme.
For those who are directly going through this blog, we are assuming that you know your goals and mutual funds schemes better. As we have discussed those in detail in previous blog posts. If not, you can follow the below articles to get the better idea.
- Why you should invest in a mutual fund?
- 10 Common Mutual Fund Myths
- Types of Mutual funds Schemes currently in the Market
- Must know terms before investing in Mutual Funds
- How to identify the best mutual funds for investment
So let’s start with, what all the different steps or processes involved in buying a mutual fund.
Decide a Goal:
Your prime responsibility starts with deciding goal for the investment. The reason why I emphasize on the goal setting is that generally there is a human tendency to withdraw money from fund’s schemes when investor find that their returns are decreasing for some time during down phase of the economic cycle, which is just the temporary phase in every mutual fund scheme or every investment. But if you made the investment with a goal in mind, you won’t be budged by the temporary movements.
Another reason, which we hear quite often for early withdrawal is any other priority event occurs i.e. cousin marriage, house repairing etc., or any emergency situation such as family member gets hospitalized or buying a car etc. This scenario requires money which turns your eye towards the fund to fulfill these short-term goals without considering the long-term goal.
I know these are also important things which require your immediate attention, but it can be carried out by proper financial planning (which will be the part of our wealthblog’s series) so that you don’t hurt your long-term goals.
Decide a Fund Scheme
After you have decided on your long-term goal, it’s time to analyze the best mutual fund scheme which suits your goal and its associated factors .
Please go through the embedded links to know more about this and comment if we missed anything.
Details and Documentation
Before investing in any particular scheme there are some pre-requisite which needs to be filled in the form asked by AMC(Asset management company) or any third party’ distributor. So you need to keep the below information handy with you while buying a scheme.
- Personal Details
- PAN Card
- Aadhar Card
- Saving Bank Account Number
- KYC Compliant
I know, you would be thinking about the last point, whether you are KYC compliant or not. KYC(know your customer) is a term commonly used for Customer Identification Process. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries including Mutual Funds to ‘know’ their clients.
How to identify whether KYC Compliant?
- Visit any of the below sites
- Enter your PAN and click ‘SUBMIT’
- Check the status
- If KYC status is “In process”, “Verified” or “New KYC Registered” then proceed ahead with the mutual fund registration process.
- If KYC status is “Invalid data” then you need to initiate KYC process. Read in next point how you can initiate.
- CDSL Ventures Ltd. CVL – https://www.cvlkra.com/
- NSE (DotEx International) – https://www.nsekra.com/
- NSDL Database Management Ltd (NDML) – https://kra.ndml.in/
- CAMS – https://camskra.com/Home.aspx
- Karvy – https://www.karvykra.com/
Last but not the least, this is the final steps to purchasing mutual fund schemes from different distribution channels. So you should read carefully to get the fund scheme matter in your own hands.
Types of Distributor Channels:
Third Party Distributor:
These are the third party distributor which are directly or indirectly connected with the AMC. You can find these distributors as individual/agents or as an online portal.
- These are sales professionals who reach out to potential customers and inform them about the different fund options.
- You can choose based on your income, investment goal and risk profile. The agent/banks can help you with applications, redemption, transactions and cancellation among others. They charge commissions for their services.
- Agents/Banks can help you out in the KYC process completion, you just need to provide some personal details and your authorization to carry out the process.
- There are several online portals you can choose from found as below: https://kuvera.in/ https://www.fundsindia.com/ https://cleartax.in/s/mutual-funds
- These online portals charge you with the nominal fee for processing your mutual fund’s scheme. They hold almost all types of the schemes based on your goals and you can track it very easily.
- KYC Compliant services also be provided by these online portals before purchasing a fund’s scheme.
- They provide convenient and affordable service to sell and purchase fund schemes from their own network.
- Share brokers generally provide the platform to trade companies share. Additionally, they help you in transacting fund’s scheme through their portals.
- These are suitable for the ease of service and tracking the progress. It generally beneficial for someone who is investing in shares and can purchase the funds through the same portals to maintain and track the overall financial progress.
- These brokers charge the commission or fees while purchasing any funds.
- KYC process is already compliant if one has the share trading account.
- Direct channel is the direct medium through the AMC(Asset management company) center or website.
- They don’t charge any commission from the investor and you have to track your fund status by directly going to their website.
- KYC Compliant cannot be done through online portals of these AMC, you have to visit the AMC center to complete your KYC process.
Buying a mutual fund scheme is as easy as online shopping. There are numerous options to choose from as per your convenience. So start early and reap the benefits in long-term. Happy investing to you.
Financial Freedom Enthusiast
Spend 6 years in learning Stocks & Mutual funds Investment. A traveler from soul, finance is passion, Investment is hobby.