How to Invest in Mutual Funds Online - Step-By-Step Guide

There are two ways to invest in mutual funds – you can personally visit the fund house and buy mutual funds of your choice, or you can do it online using your laptop, smartphone, personal computer, or even a tablet with a decent internet connection. However, before investing in mutual funds, you must get acquainted with the different types of schemes available for investment. Here’s a list of some popular mutual funds in which you can invest to target your life’s short term or long term financial goals –

Equity mutual funds

Also known as growth funds, these funds predominantly invest in equity and equity related instruments of companies that are publicly listed in India. These are very high risk mutual fund schemes as their portfolio is constantly exposed to market volatility. The investment objective of equity funds is to offer capital appreciation over the long term.

Debt funds

Also referred to as income funds, debt funds invest a majority of their assets in debt and debt related instruments. Debt funds offer diversification and can provide the necessary cushion during a market downturn. Debt funds invest in corporate and government bonds and fixed income securities like commercial papers, certificates of deposits, debentures, treasury bills, etc.

Liquid funds

Liquid funds invest in securities that mature in just 91 days. The investment objective of liquid funds is to offer high liquidity to an investor’s portfolio. Upon redemption of liquid fund units, investors can expect the equivalent sum to be transferred to their linked savings account within 24 hours. A lot of investors consider liquid funds to build an emergency fund because of their instant redemption facility.

Hybrid funds

Hybrid funds offer the best of both asset classes, equity and debt, by investing in stocks and debt related instruments. The investment portfolio of a hybrid fund can be equity oriented or debt oriented depending on the nature of the scheme. For example, conservative hybrid funds have a debt oriented portfolio whereas aggressive hybrid funds invest a majority of their assets in equity.

Tax saving funds

Investors can even seek tax exemption by investing in a specific type of mutual fund scheme. Equity Linked Savings Scheme (ELSS) is an open-ended mutual fund scheme that comes with a statutory lock-in and tax benefit. Investors can invest up to Rs. 1.5 lakhs per fiscal year in ELSS and seek tax exemption under Section 80C of the Indian Income Tax Act, 1961.

Index funds

Index funds try to generate capital appreciation by replicating the performance of their underlying benchmark with minimum tracking error. These funds invest in stocks in the same manner as their underlying index without changing the portfolio structure.

Exchange Traded Funds

Exchange traded funds or ETFs are mutual funds that can be traded at their current market price during live trading hours. ETFs are listed at the exchange and investors can buy or sell their units just like any other company stock. However, investors need to have a demat account to store their ETF units.

How to invest in mutual funds online?

Investing online is simpler than investing offline. But before investing, retail investors must understand their risk tolerance, investment horizon, and invest in a scheme whose investment objective aligns with that of theirs. Once they are sure about which mutual fund scheme to invest in, they can buy that mutual fund directly from the AMC that owns that particular fund.

First time investors have to get their KYC or eKYC done. Know Your Customer (KYC) is a mandatory process that requires investors to submit some basic details like name, age, gender, address, nationality, etc. Investors can either go to the AMC and personally get their KYC done offline or they can even do it online via eKYC (where ‘e’ stands for electronic). Once they submit the duly filled KYC form online, the in-person verification must be completed which can now be done online as well.

Once they are KYC compliant investors must decide whether they want to invest in the chosen mutual fund via SIP or in lumpsum. Investors can even opt for the minimum investment amount. However, the minimum investment sum for SIP and lumpsum may vary. First time investors who aren’t quite sure about how much they need to invest, such investors can refer to the SIP calculator or lumpsum calculator depending on their investment goals. This calculator is a tool that is easily available online at/for absolutely zero cost/s to investors. In general parlance, if investors’ investment goal is long term, starting a SIP might be a more feasible investment option.

Investors can log on to the AMC's website (for example, https://web-cug.axismf.com) and start their investment process by clicking on the ‘New investor’ icon.

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