Financial Awareness Level
How to start investing in Mutual Funds?
Mutual funds (MFs) are a popular investment option for those who aim to seek long-term wealth growth. Easy accessibility, low minimum investment amount, and access to investing in the nation’s economic growth are among the biggest advantages of mutual fund investing.
In this blog post, we'll provide a step-by-step guide to help you get started with investing in mutual funds:
Step 1: Complete Your KYC Documentation
• Complete your Know Your Customer (KYC) documentation, which is a one-time process
• This involves a simple verification of investor identity and address proof
• All first-time investors must complete their KYC
*Please refer the KYC form for details on Aadhar/Non-Aadhar KYC requirements.
Step 2: Choose an Appropriate MF Scheme
• Identify an appropriate Mutual Fund scheme based on your investment goals and risk appetite
• Consider the three important attributes of MF scheme categories: Risk, Expected return, and Time-period
• There are over 20 MF scheme categories to choose from
• Equity-related MF schemes are for long-term capital appreciation
• Bond schemes are less risky than equity schemes
• Select a scheme offered by a particular Asset Management Company (AMC). Important attributes include longevity of past performance, fund manager experience, risk, and expense ratio etc.
• Note that some investors make the decision themselves, while others seek guidance from MF distributors or investment advisors
Step 3: Make an Application
• Fill out a physical form and submit it to the AMC’s Official point of acceptance
• Check if the KYC, FATCA, CRS UBO is complete
• Bank details are an important part of the application process. Investments from 3rd party are not permitted in Mutual Funds. Note that redemption (when you sell your MF investment) proceeds are credited directly to the specified bank account
• A simpler option is to transact online through the AMC’s website or authorized app
• Make sure you have registered a nominee. Effective 1st April 2023, it is mandatory to register a nominee /opt out failing with no transactions will be allowed in the portfolio
*Please refer the KIM for detailed instructions.
Step 4: Make the Payment
• Accepted payment modes include bank cheques and online platforms
• Investments from 3rd party are not permitted in Mutual Funds. Once payment is made, the AMC generates a folio number and shares an account statement with the investor referred as CAS
• CAS (Consolidated Account Statement) is a single/combined account statement which shows the details of financial transactions made by an investor during a month across all Mutual Funds and also other securities held in a Demat mode
• Online investors receive the details via email and SMS, while offline investors receive a physical communication at their designated postal address
• Demat investments can be done through the respective Depository participant and physical investment application
In conclusion, investing in MFs is a straightforward process. By following these steps, you can start growing your wealth today.
FAQ Section
What is a Mutual Fund?
A Mutual Fund is an investment vehicle that pools money from multiple investors to purchase securities such as stocks, bonds, or money market instruments. The investment objectives and strategies of each mutual fund are stated in its offer documents.
How can I start investing in Mutual Funds?
Investing in Mutual Funds is a simple process that involves 4 steps: completing your KYC documentation, choosing an appropriate MF scheme, making an application, and making the payment.
What is Know Your Customer (KYC) documentation?
KYC documentation is a one-time process that involves a simple verification of your identity and address proof. All first-time investors must complete their KYC before investing in Mutual Funds.
How do I choose an appropriate MF scheme?
To choose an appropriate MF scheme, consider your investment goals and risk appetite, and consider the three important attributes of MF scheme categories: risk, expected return, and your desired time-period. Select a scheme offered by an Asset Management Company (AMC) based on scheme attributes. Some of the important attributes include the longevity of past performance, fund manager experience, risk, and expense ratio.
What is the process of making an application to invest in Mutual Funds?
The process of making an application to invest in Mutual Funds involves filling out a physical form and submitting it to the AMC's representative or transacting online through the AMC's website. It is utmost important to fulfil the regulatory requirements associated with investing like KYC, FATCA UBO etc. Nomination and bank details are an important part of the application process. Redemption/ Income Distribution cum Capital Withdrawal (IDCW) (earlier known as Dividend) (wherever applicable) proceeds will be credited directly to the specified bank account.
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Disclaimer
An Investor Education And Awareness Initiative Visit https://www.hdfcfund.com/information/key-know-how to know more about the process to complete a one-time Know Your Customer (KYC) requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website (www.sebi.gov.in/intermediaries.html). For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints directly with the AMCs. if they are not satisfied with the resolutions given by AMCs, they may raise complaint through the SCORES portal on https://scores.gov.in. SCORES portal facilitates investors to lodge complaint online with SEBI and subsequently view its status. In case the investor is not satisfied with the resolution of the complaints raised directly with the AMCs or through the SCORES portal, they may file any complaint on the Smart ODR on https://smartodr.in/login.
