How To Invest In Mutual Funds Online?

What are mutual funds?
Mutual funds are a type of financial tools that consists of a pool of money collected from several investors. The money collected for mutual funds investment is allocated in securities such as bonds, money market instruments, stocks and other assets. Mutual funds are managed by a professional fund manager. They are the ones who allocate the funds’ assets and attempt to generate income for the fund's investors. An investor’s mutual funds’ portfolio is structured and maintained to match the investment objectives stated in its schemes.
Mutual funds are known for giving small or individual investors access to professionally managed portfolios of securities like bonds, equities and other securities. Unitholders, therefore, participate proportionally in the gains or losses of the fund.

What should be done to select the right mutual fund schemes?
Listed below are the things you need to check to get the best returns from mutual funds scheme:

1. Determine the investment objective:
Before opting for a mutual fund scheme , it is of utmost importance for you to determine the main objective behind choosing the scheme. Imagine, you want to grow your savings in the long term. To do so, you could opt to invest in mutual fund plans for ten or more years so that the money can be used for purposes like children’s education or business ventures. It is important to note that identifying the objective is not only applicable for long term but also short-term goals. For instance, you want to buy a high-end car. So, you could opt for a systematic investment plan for a shorter period.

2. Thoroughly study the market condition:
Before investing, it is prudent on the part of the investor to meticulously and completely study the market conditions on a regular basis. While the market may be growing at a particular time, it does not mean that it will perform well every day.

3. Look at the SIP rankings of a scheme:
Other than identifying the objective and studying the market conditions, it is also better if mutual funds investors could check the ranking of the scheme in the market. Nowadays, thanks to the internet, it is very easy to find if a mutual funds scheme is beneficial to the investor. However, there is a catch. Different portals may have different rankings for different plans. So, to avoid confusion, you may need to ascertain the legitimacy of the third-party aggregator you are referring to before investing.

4. Check the performance of a scheme:
The best mutual fund scheme is the one that is known for offering the best returns to the investors regularly. It is very important to check the consistency offered by the SIP. All that an investor needs to do is evaluate a scheme based on its past returns. However, it is also important to note that looking at the past performance of a scheme is not enough. That is where the internet comes in. Checking the performance of the SIP will help you ascertain whether the scheme is a long-time performer or just a fad. Sometimes, investors will find several SIPs with fantastic ratings that provided great returns to the investors for one year, but as time passed by, they delivered poor returns. Hence, before opting to invest in mutual funds, it is of utmost importance on the part of investors to look out for fads.

What are the types of mutual funds?
Listed below are the numerous types of mutual funds:

• Equity funds:
Equity mutual funds are that category of mutual fund plans which invest the investors’ money in stocks. Capital appreciation is one of the main objectives of these funds. However, since the returns on equity funds are linked to market movements of stocks, investors need to be comfortable with taking risks.

• Hybrid funds:
Hybrid funds, which are also referred to as balanced funds, are a subcategory of mutual funds that consists of a bond (debt) component and a stock (equity) component in a specific ratio. These mutual funds are known for helping investors to diversify their portfolio by investing in asset classes such as equity and debt. Usually, hybrid mutual funds stick to a relatively fixed mix of bonds and stocks.

• Debt funds:
Debt funds (which are also referred to as fixed-income funds) are known for investing in assets like government securities and corporate bonds. The main objective of these funds is to offer reasonable revenue to the investors. These funds are ideal for you if your financial goal is to acquire a steady income over time.

• Exchange-traded fund (ETF):
Exchange-traded funds also referred to as ETFs, are a collection of various securities such as money market instruments, shares, bonds etc. To define it in simple terms, an ETF is an assortment of different investment avenues. ETFs are known to offer the best attributes of two popular financial assets, i.e., stocks and mutual funds.

• International mutual funds:
In the last few years, international mutual funds have garnered interest among Indian investors. That is because of their potential to generate capital appreciation by investing across global economies. They are known for investing in securities of international companies that aren’t publicly listed in India. They are open ended mutual fund schemes that predominantly invest in equity and equity-related instruments. Apart from equity and related instruments, they also invest in debt instruments of big corporations that aren’t available for direct investment to the Indian investors. These funds can be an ideal investment option for those who wish to invest in foreign markets but do not have the resources to do so.

• Solution-oriented schemes:
Solution-oriented schemes are also referred to as solution-oriented mutual funds. They are a type of close-ended funds which are known for providing investors with the flexibility to design their mutual fund portfolio and at the same time even generate higher growth because of the longer tenure investment horizon. They are ideal for investors looking for long term wealth accumulation. The wealth accumulated through these schemes can be used for a myriad of purposes such as education or marriage of a loved one or even for personal expenses after retiring. These schemes have made it simple for processes such as financial planning of complicated long-term goals that may or may not need a change of strategy in the future.

What are the advantages of mutual funds?
Investing in mutual funds comes with numerous advantages:

• Mutual funds are professionally managed:
A certain amount of skill is required for investing in financial markets. Firstly, you need to thoroughly research the market and determine the best investment options available. To invest in a market, you need to be knowledgeable about things such as company financials, its macroeconomy and the different sectors, from the perspective of an asset class. To put it simply, all of this requires a significant amount of time and commitment from you. However, if you don’t possess the skill or the time to dive deep into the market, investing in mutual funds may be an excellent alternative. In these schemes, a professional fund manager takes care of your investments and strives hard to provide reasonable revenue. In return, you must pay specific fees for the professional management of your mutual fund investments. A fund manager regularly monitors investments and rebalances the portfolio accordingly to meet the scheme’s objectives. Portfolio management by professional fund managers is one of the most important advantages of a mutual fund.

• Mutual funds are affordable:
One of the things that causes prospective investors to think twice before investing in the market is the notion that they might be expensive. The minimum initial investment for most mutual funds is quite affordable.

• There are tax benefits:
Another benefit is that mutual fund investors can claim a tax deduction of approximately ? 1.5 lakh by investing in Equity Linked Savings Schemes (ELSS). Investors can enjoy this tax benefit as per Section 80C of the Indian Income Tax Act, 1961. Usually, ELSS funds come with a lock-in period of 3 years. Therefore, if you invest in ELSS funds, you can only withdraw your money after the lock-in period ends. Apart from tax benefits for ELSS, another advantage is the indexation benefit available on debt funds. For traditional products, all interest earned is subject to tax. However, in the case of debt mutual funds, only the revenue earned over and above the inflation rate is subjected to tax. Through this benefit, investors get to earn post-tax revenue.

• They are highly liquid:
Mutual funds can be easily redeemed i.e., liquidated, if an investor has some financial emergencies. An investor’s mutual fund portfolio can be redeemed on any business day i.e., whenever the markets or banks are open. This means that you have easy access to your money. After redemption, the redeemed amount will be credited into your bank account within one day to 3-4 days, depending upon the type of scheme. In the case of liquid funds and overnight funds, the redemption amount is paid to the investors on the next business day. However, it is important to note that if you have opted to invest in close-ended mutual fund schemes, they can be redeemed only on maturity. Similarly, ELSS has a 3-year lock-in period and can be liquidated only after that.

• They are well-regulated:
Another advantage of mutual funds is that they are regulated by the capital markets regulator i.e., the Securities and Exchange Board of India (SEBI). Through the SEBI (Mutual Funds) Regulations, 1996, the Securities and Exchange Board of India has laid down stringent rules and regulations regarding things like investor protection, transparency with an appropriate risk mitigation framework and fair valuation principles.

• They have a low expense ratio:
The other major benefit of mutual funds is their low expense ratio. The simple definition of expense ratio is that they measure how much of a fund's assets are used for administrative expenditures and other operating expenses. Because of the huge economies of scale, mutual fund schemes have a low expense ratio. Operating expenses of a scheme include things like administration, management, advertising related expenses, etc. The limits of expense ratio for various types of schemes have been specified under Regulation 52 of SEBI Mutual Fund Regulations, 1996.

• Mutual funds also offer diversification:
One of the easiest ways to diversify your investments across different securities and asset categories such as debt, equity and gold is by buying units in a mutual fund scheme. This helps in spreading the risk. Doing this ensures that all the investors’ money isn’t invested in a single asset class. Diversification proves to be beneficial when one of the assets of the mutual fund isn’t performing well but others are. With the help of the diversification process, the risk associated with one asset class is countered by the others. This procedure ensures that the investors don’t lose out on the entire value of their investment even if a particular component of the portfolio goes through a turbulent period. Therefore, portfolio diversification is one of the most prominent advantages of investing in mutual funds.

Ways to invest in mutual funds online

Using the official website
Nowadays, most fund companies provide an online platform for investing in mutual funds. All you do is fill out the necessary information according to the directions on the fund house's official website and submit it. You can also complete the KYC procedure online (e-KYC), but you will need to input your PAN and Aadhar number to do so. At the backend, the information will be checked, and after it has been, you can begin investing. Most people prefer to invest in mutual funds online since it is simple, quick, and hassle-free.

Invest through App
Many fund companies allow investors to make investments via a mobile app that has been downloaded. The app would enable users to see account statements, acquire or sell units, invest in mutual fund schemes, and check other folio-related information. Axis Mutual Fund is one of many fund companies that accept investments made through an app. On one platform, using apps like Groww, investors can make investments and get information about all of their investments from various fund firms.

How to invest in mutual funds?
To invest in mutual funds, you firstly need to have a mutual fund's portfolio. Opening a portfolio involves the steps mentioned below:

• Fill out the registration form:
The first step here is to fill out the registration form with details such as your name, number, postal address and email address. After doing that, you can proceed to the next steps. Which are:

• Complete the KYC process:
Once you have provided personal details on the registration form, you need to provide documents that will verify the details on the form. Some of the documents that can be used for the KYC process are Aadhar card, PAN card, bank documents and passport.

• Determine the suitable mutual fund:
Once the KYC documents are submitted, you need to determine the mutual fund that will help you reach your financial goals. Once you have selected the mutual fund, you can proceed to the next step, which is to invest the required amount.

• Invest amount:
The final step in this process is transferring the amount which is required for the mutual fund. Moreover, you can also leave a standing instruction with your bank if you are investing in a mutual fund every month.

Please make sure to note that you must go through the same aforementioned four steps if you are signing up for mutual funds through online means.

Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.