Mutual funds are a popular investment option in India as they provide an opportunity for investors to diversify their portfolio and earn returns without having to invest in individual stocks. However, for beginners, the process of buying mutual funds can be a little confusing. In this article, we will discuss how to buy mutual funds in India, step by step.
Step 1: Choose a Broker or Fund House
The first step to buying mutual funds in India is to choose a broker or a fund house. Brokers are intermediaries who facilitate the purchase of mutual funds on behalf of investors, while fund houses directly sell mutual funds to investors.
Some popular brokers in India include Zerodha, Upstox, and ICICI Direct, while popular fund houses include HDFC Mutual Fund, SBI Mutual Fund, and Aditya Birla Sun Life Mutual Fund.
Step 2: Complete the KYC Formalities
Before investing in mutual funds, investors need to complete their KYC (Know Your Customer) formalities. This involves submitting identity proof, address proof, and other relevant documents to the broker or fund house.
KYC can be completed online or offline, and the process typically takes a few days. Once the KYC formalities are complete, investors are given a KYC acknowledgement letter.
Step 3: Select the Mutual Fund
The next step is to select the mutual fund that you want to invest in. This will depend on your investment goals, risk appetite, and investment horizon.
For beginners, it is recommended to invest in mutual funds that are managed by reputable fund managers and have a good track record. Investors can choose from different types of mutual funds, including equity funds, debt funds, hybrid funds, and index funds.
Step 4: Submit the Application Form and Make the Payment
Once you have selected the mutual fund, the next step is to submit the application form and make the payment. The application form can be obtained from the broker or fund house and can be filled online or offline.
Investors need to provide their personal details, investment amount, and bank details in the application form. The payment can be made via net banking, debit card, or cheque.
Step 5: Receive the Mutual Fund Units
After the application and payment have been processed, investors will receive the mutual fund units in their demat account. The units will be credited to the investor’s account within a few working days.
Buying mutual funds in India is a simple and straightforward process. Investors need to choose a broker or fund house, complete their KYC formalities, select the mutual fund, submit the application form, and make the payment. By following these steps, investors can diversify their portfolio and earn returns on their investments. However, it is important to do proper research and understand the risks associated with mutual fund investments before making any investment decisions.