A Complete Guide to Investing in Mutual Funds, offline and online

Mutual funds are a great way to start your investment journey. You can literally invest as low as ₹100 as a lump sum or ₹500 every month and forget about it. While you go live your life, your investment will work hard for you and offer great returns. Mutual funds are handled by financial experts, known as fund managers, who actively manage the fund. It is convenient, offers diversification, and is professionally managed, making it an attractive investment opportunity for new investors.

If you’re sold, then here’s how to start investing in a mutual fund, assuming you’ve already found the ideal mutual fund that suits your needs. If you haven’t, then check out this article, which will quickly help you find a mutual fund.

Two Ways to Start Investing in Mutual Funds

OFFLINE

To invest in mutual funds through the offline mode, these are the key steps to follow:

Visit an Asset Management Company (AMC) or Mutual Fund Distributor
AMCs and mutual fund distributors have multiple branches across cities. They employ financial advisors and agents who can guide you through the process of investing.

Complete the KYC Procedure
KYC (Know Your Customer) is a mandatory step before investing in mutual funds. To do this, you need to submit a self-attested copy of your PAN card, Aadhaar card, and proof of address (such as a utility bill or passport). KYC helps verify your identity and prevents financial scams.

Fill out the Form
Collect the required form from the fund house and fill in all the necessary details regarding:

• • The fund you’ve chosen (equity, debt, or hybrid)
  • The investment tenure (short-term/long-term)
  • The mode of investment (lump sum/SIP)
  • Your personal and bank details

Choose Between Regular Plan or Direct Plan
A regular plan involves you investing through a distributor or an intermediary, resulting in a commission fee included in the expense ratio. The benefit is that you often receive personalized advice and additional services from the distributor, which can be beneficial for beginners who need guidance.
In contrast, a direct plan cuts out the intermediary, saving on commission charges. However, investing in a direct plan means you may not receive personalized advice. This plan is ideal for experienced investors who are comfortable managing their portfolios.
Cost Comparison: While direct plans tend to have lower expense ratios due to the absence of intermediaries, the long-term returns can differ due to the lack of personalized guidance and advice. A thorough understanding of your financial goals and investment strategy is essential when choosing between the two.

Submit Your Documents
After completing the application form and selecting your investment plan, submit the following documents:

• • Application form with personal details, bank account information, and investment details
  • KYC documents (self-attested copy of PAN card, Aadhaar card, proof of address)
  • Payment (Cheque, Demand Draft, or Cash)

For payment methods:

• • Cheque: Ensure the cheque is crossed (account payee only) and made payable to the mutual fund scheme (e.g., "ABC Mutual Fund - Scheme Name").
  • Demand Draft: Ensure it is filled out correctly and made payable to the mutual fund scheme.
  • Cash: Some AMCs may accept cash payments up to ₹50,000, but check with the AMC for the current policy.

Submission Process
Visit the AMC branch, mutual fund distributor, or RTA office. Submit your completed form, KYC documents, and payment.

• • The representative will verify your documents and process your application.
  • Ensure you receive an acknowledgement receipt for your submission.

Acknowledgement and Confirmation
After processing, you will receive an acknowledgement receipt. Later, an account statement will be sent, confirming your investment details and the number of units allotted.

Tips for a Smooth Process

• Double-Check Documents: Ensure all information is accurate to avoid delays. Mistakes can lead to rejection and further complications.
• Seek Assistance: If unsure about any part of the process, don't hesitate to ask the AMC representative or a financial advisor.
• Keep Copies: Always keep photocopies of all documents submitted for your records.

ONLINE WITH TRADEJINI

If you prefer the convenience of investing in mutual funds online, Tradejini provides a seamless platform to do so. Tradejini is a stockbroker that also allows investors to invest in mutual funds via their accounts. Here’s how you can start:

1. Create or Link Your Tradejini Account
   If you don’t already have a Tradejini account, you can easily open one by visiting the Tradejini website. The process involves filling out basic details, submitting KYC documents, and completing a risk profiling questionnaire. If you already have a Tradejini account, simply log in.
2. Log into Your Account
   Once your account is set up or linked, log in to your Tradejini account using your credentials. Tradejini offers an intuitive and easy-to-navigate interface for mutual fund investments.
3. Choose Mutual Funds to Invest In
   After logging in, navigate to the mutual fund section. Tradejini provides a wide variety of mutual funds across categories such as equity, debt, hybrid, and sectoral funds. You can filter the funds based on performance, ratings, and other criteria to find the best options that align with your financial goals.
4. Complete the KYC Process
   If you haven’t already completed your KYC through Tradejini, you will be prompted to do so. Tradejini allows you to complete your KYC online by uploading documents like your PAN card, Aadhaar card, proof of address, and a recent photograph. You’ll also go through a video verification process.
5. Select Your Investment Mode (SIP or Lump Sum)
   Choose the mode of investment that suits you—whether it’s a one-time lump sum investment or a Systematic Investment Plan (SIP). SIP allows you to invest a fixed amount monthly, while lump sum involves a single large investment.
6. Make the Payment
   Tradejini supports various payment methods, including UPI, net banking, and bank transfers. After entering the investment details, make the payment via your preferred method.
7. Track Your Investment
   Once the payment is made, your investment is confirmed. You will receive a confirmation email or SMS, and you can track the performance of your mutual fund investments directly through your Tradejini dashboard. You can also manage and redeem your mutual funds whenever required.

Potential Pitfalls to Avoid

• Lack of Diversification: Avoid investing all your money in a single fund. Diversify your investments across different mutual funds or asset classes to reduce risk.
• Overlooking Fund Performance: Don’t invest blindly without checking the fund's past performance and understanding its investment strategy. Past performance is not indicative of future results, but it can give you an idea of the fund’s consistency.
• Ignoring Fees: Always pay attention to the expense ratio, as high fees can eat into your returns over time.
• Not Reviewing Regularly: Periodically review your investments to ensure they are aligned with your financial goals. Rebalancing may be necessary as market conditions change.

Conclusion

Mutual funds are an excellent way to start your investment journey, offering professional management, diversification, and convenience. Whether you invest offline or online through Tradejini, following these steps will help you get started on the right foot. With a clear understanding of the types of mutual funds, the differences between regular and direct plans, and some tips for avoiding common pitfalls, you're now equipped to make informed decisions.

Happy investing!