A few days ago I did a post on how to invest in a mutual fund Offline, today will tell you how to do it Online.

There are a few ways how you can invest in a mutual fund online.

1. You already have an IFA (and you think he is adding value to your life): In this case you may already be an investor and may have a folio number. Just get a PIN number from the fund house in which you wish to invest. Every time you invest please remember to put the IFA’s number, or he will not get any brokerage (this is really sad from the IFA’s point of view, but a harsh reality). I was pleasantly surprised to see Fidelity Mutual fund which tags a client permanently to an IFA. This is not something great, but basic hygiene. An I F A selling say Hdfc or Templeton mutual fund is doomed if he tells the customer about the E-investing. The fund house can cut him off – and say well the client did not put your code….Well remember the Golden Rule of investing? He who has the gold makes the rule. The best thing is YOUR IFA gets paid and the money is NOT COMING FROM YOUR fund value (well that is what I believe, not sure how trail works, have not got a nice answer so far).

2. When you are indifferent to which IFA you choose, you can go to www.fundsindia.com and invest directly. They also do not charge you anything for the transaction – so you should be agnostic to this mode of investing.This is again a self help model – you should know which fund to choose, time frame, etc. However if you know how much, which fund, how, why…this is a good model.

3. Go through a bank: here the bank is the IFA and you could get them to do the paper work. However you may have to live with suboptimal advice. Some banks charge a % age of the fund invested – this is a no- no, and you should not be willing to pay this. Some banks charge say Rs. 350 for the first transaction and Rs. 35 per month SIP debit – I see no great reason to pay this, but the amount is quite small and some people are willing to pay it. I am a lover of compounding and do not like to lose small change which could have otherwise been compounded.

4. Go to a broker: This is the most ‘pushed’ – and do not want to get into a controversy as to why who is pushing this. This is a mode by which you go to a broker who does the transaction with a pool, bank does the payment and the ‘units’ go to your demat account. You will have to pay brokerage, the pooling costs (the exchange will charge the broker – who will pass it on to you), and the demat charges – either while buying or selling. Too many intermediaries – and I have no clue why they are doing it free (refraining from giving my views – any way all of you call me cynical and sarcastic :)).

I prefer the IFA route simply because my mutual funds are < 5% of my investment funds and track only 7-9 schemes – frankly do not care whether all the schemes appear in one page or no. I see some value add by the IFA and very importantly I prefer knowing that the mutual fund is a phone call away. If you go through a broker and something goes wrong – my guess is you will go from pillar to post. Nobody will know what went wrong. One banker of mine once gave a statement with all holdings, and no direct statement – I just shut the bank account.

Ask people who have had problems with their demat service provider! They treat you like YOU HAVE stolen the shares.

Yuck! lesser the number of people to deal with in life, the better.

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  1. Subra,

    //you will hear bouquets and brickbats too..however my no censor policy will continue..//

    Absolutely, please do…I am following the comments closely, as you can imagine.

    Regarding Deepak’s feedback, I have no issues. I’m sure he is right – we have not been very consistent in terms of how fast transfers have been processed, and in some cases (non-standard, as he put it), we have run into some rough weather. It is an effect of the combined abilities of us (FundsIndia), the AMCs and the R&Ts to be able to process them quickly and successfully.

    For the others who have expressed appreciation for our services, I am most grateful.

    Thanks,

    Srikanth

  2. @ Srikanth – thanks for ur inputs along with Subra.. Do u service retail customers or only instituional investors only? Also, what is the turnaround time between document submission (or pickup – would be great!) and a/c creation/management.. I did happen to visit ur company’s website, but I thought would quickly park my queries here directly to u…
    @ Subra – thanks for bringing on this post..

  3. Hello Kalyani,

    Thanks for the question.

    We need ALL our customers to be KYC registered.

    If you are KYC registered, we will activate your account as soon as we receive your documents (on the same day). If you are not KYC registered, we can process KYC registration for you but it will take a few days.

    My suggestion would be to get KYC registration processed locally, and send us the ack. form along with the application documents. We’ll get the account open right away.

    thanks,

    Srikanth

  4. I have my pan card and I am planning to invest in MFs thro’ fundsindia.com. My KYC is not yet done / registered. How do I get KYC done / registered locally (I live in Bangalore)? Sorry for asking such a basic question but I need help on this matter! Please!!

  5. Venky,

    There are tons of places in B’lore where you could get KYC done. If you go to http://www.cvlindia.com, there is a ‘List of POS’ link in the home page. That’s a spreadsheet you can download that will give you the full list of Point of service for KYC all over India, including Bangalore.

    Please write to us at contact at fundsindia if you need more help. Thanks.

    Subra,

    As the local big politician here would say (you know who), we are happy to give you a place in our hearts. 🙂

    Srikanth

  6. ICICI direct had its teething troubles, but has come out really well in terms of facility, features and also costs. With the new MF tariffs, it favours people whose portlolio size is Rs.8 lakh, with no charges levied except the demat charges. For all the criticism that ICICI Bank faces for many reasons, ICICI direct comes out quite different and is quite convenient and beneficial to customers.

  7. Thanks Srikanth. I have downlaoded the spreadsheet and have zeroed down on Bajaj Capital in Jayanagar, Bangalore. Hope to get my KYC done asap and start investing. Thanks once again.

    Subra, thanks for allowing your readers to post queries and get answers almost instantaneously. I do not know how to thank you and your readers. Thanks very much guys!

  8. Well I have been using Citibank since last 4+ years for MF investments.
    I have had my share of good and not-so-good experiences. Ignore your RM and you will do just fine.

    If you want to invest as a joint holding..don’t even consider investing directly to fund house online. Most of them do not have any clue.

  9. by making people go and invest through brokers is the present Chairman of SEBI creating business for his past organisation? or am I seeing too much, when there is nothing to see?

  10. Hi Subra,

    I am a new investor and want to start investing in mutual funds.
    A friend advised me to purchase funds through Dmat account only and so I want to take an acccount from kotak securities.Can you please advise me what is the profitable mode of investing in mutual funds for an investor like me?

  11. Online Mutual Fund Investment:-

    Its simple. ICICI Direct is for HNI (High Networth Individuals). Fundsindia.com is for both small retail investor and HNI.

  12. Subra,
    I’ve been using Fundsindia since April 2010.. and find them extremely helpful. I’ve never felt the need to look out for any other service provider.
    Srikanth,
    If you are reading this – A BIG THANK YOU for the awesome service!

  13. Hello Subra,
    I am a very new investor; In fact I want to start investing now in Mutual Funds as well as Equity.
    Can you please guide me what is process for mutual fund application and how investing in them works……
    What’s the cheapest and hassle-free mode to invest mutual fund??
    Please guide me or give me any source of info to start with….

    Same questions to readers also…..

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