How important it is to have a Demat Account to invest in mutual funds?
Mutual funds make an important part of any profitable investment portfolio.
Some investors have good knowledge of these while many don’t even have the basic understanding of mutual funds.
These people have many questions about mutual funds. What are the mutual funds? How to invest in MFs?
Why should one include MFs in their portfolio? Do I need a Demat account to invest in mutual funds?
Mutual fund industry in India is still in its starting stage, but it has got huge popularity among different investors.
Technological advancement and easy access to different investment tools have played vital role in their popularity. The only thing people want now is ease of transaction.
They look for different investment tools. Those engaged in online stock trading look for similar options for mutual fund investment also.
So here are some of the available options to invest in mutual funds along with the right techniques to utilize these tools.
Whether you want to invest in shares or mutual funds, having a bank account is essential for every trade. If you don’t want to rely on third parties, you can directly walk into your bank branch and ask them if they sell the mutual fund scheme of your choice because many banks also work as a MF-agent. The only concern when trading with the bank is high chances of mis-selling. So be careful and extra cautious.
Online trading portals have made investment much easier. One just needs to open an account and invest in the selected funds. You just need some documents including your PAN number, photo ID proof and a cancelled cheque copy to open an account. Online portals deal in an array of schemes, so when dealing with the online discount brokers like My Value Trade you can invest in any mutual fund.
Every mutual fund company in India has its own website to help investor easily buy mutual funds. While trading with Asset Management Company, the investors have to make the first transaction physically and then for further transactions they can go online.
The easiest option to invest in mutual funds today is through Demat account. Though this is not essential to open a Demat account to invest in MFs, you get many benefits with it. If you are a regular share trader who uses Demat account to buy and sell shares, you can save yourself from the hassle of maintaining different accounts. There is no limitation for the selection of funds. You can start a monthly SIP, invest in ETF as well as can buy plain open-ended funds through your Demat account.
Registered Individual Mutual Fund Advisor
There are thousands of registered Association of Mutual Funds in India (AMFI). Based on your location, investment size and other preferences, you can find a nearest mutual fund agent. Just visit the AMFI website and you will get the list of agents in your region. If you don’t have time to visit the agency and don’t have much understanding of mutual funds to trade online, this is the best option for you. The agent comes to your doorstep to help you in form filling and selection of the right mutual funds. They also update you with the new schemes and performance of the old investments. Just make sure you carefully check their experience and qualification.
So these are the available options for you to invest in mutual funds. The final selection depends on your experience, time and knowledge about the market. If you have good understanding of mutual funds and can analyze the market, you can just open a Demat account and buy funds. There are many discount brokers like My Value Trade, which help you trade in shares, mutual funds and commodities from the same account. Open an account with them and start investment in different funds to make a profitable portfolio.
As far as answer to the question is concerned, you don’t always need a Demat account to invest in mutual funds. It all depends on your budget, size of investment and knowledge about the MFs.
Disclaimer: All blog posts of getmoneyrich.com are for information only. No blog posts should be considered as an investment advice or as a recommendation. The user must self-analyze all securities before investing in one.