How to Invest In Direct Plans of Mutual Funds? (2024)

FAQs

How do I buy direct mutual fund plans? ›

You could invest in a Direct Plan online through the websites of the respective mutual funds or via online platforms of stock exchanges platform or Mutual Funds Utility (MFU) or other various digital channel. There are also a few online portals which offer a facility to invest in Direct Plans.

Embarking on the journey of investing in direct mutual funds can be a rewarding step towards financial growth and independence. By opting for the direct route, investors gain the advantage of bypassing intermediary commissions, potentially leading to increased returns on their investments.

For beginners, apps like Groww & Zerodha are the safest & best mutual fund apps for investing in mutual fund investment in India. However, you can have a look at mutual fund apps like ET Money, Paytm, 5paisa, myCAMs, Kuvera and others.

Disadvantages of Direct Mutual funds

Often, direct investors select schemes based on past performance without analysing other factors. Decision Making: The investment portfolio needs to be monitored regularly, and suitable alterations must be made depending on market conditions and investors financial objectives.

The most common ways to buy a mutual fund online are directly from a fund provider, through an investment company, or through an online brokerage.

Switching to a direct mutual fund increases your return on investment, unlike regular mutual funds that usually have a higher expense ratio thus reducing your ROI.

The Securities and Exchange Board of India (SEBI) regulates direct and regular mutual funds and offers the same level of protection. The distinction lies in the expense ratio and the level of guidance and advice received, which can impact potential returns.

This is made possible by the fund manager by investing mostly in the securities of companies that have the potential to offer regular payout. However, the dividends are not guaranteed and are subject to market performance.

One main attraction of direct funds is that investors will not have to pay commission. In the case of regular funds, the fund house adds your advisory charges to the expense ratio. If you are a market-savvy investor with a keen interest in finance, then direct funds can be the right choice for you.

Is there a better investment than mutual funds? ›

Mutual funds and ETFs may hold stocks, bonds, or commodities. Both can track indexes, but ETFs tend to be more cost-effective and liquid since they trade on exchanges like shares of stock. Mutual funds can offer active management and greater regulatory oversight at a higher cost and only allow transactions once daily.

Profits gained from investment in mutual funds are known as 'Capital gains'. These capital gains are subject to tax. So, before investing in mutual funds, you should clearly understand how your returns will be taxed. Moreover, you can also avail tax deductions in certain cases.

It allows the investor to buy directly from a fund house, and shave off the cost associated with going via a distributor. Direct plans have the same underlying portfolio as the regular plan. Only the NAV is different because of lower expense ratio.

The Offline Method is where you must physically fill and submit a Mutual Fund Form. The first way is to visit the nearest office of the Asset Management Company whose fund you have selected. Once you reach the centre, you will be asked to complete your KYC (Know Your Customer) process if you are not KYC compliant.

One can invest in mutual funds by submitting a duly completed application form alongwith a cheque or bank draft at the branch office or designated Investor Service Centres (ISC) of mutual Funds or Registrar & Transfer Agents of the respective the mutual funds.

In these types of plans, you purchase directly from the fund house hence, there is no broker involved, no commission needs to be paid, and finally, it results in a lower expense ratio. Platforms like ET Money allow you to conveniently invest in mutual fund direct schemes at zero brokerage and zero commission.

You must finish your KYC before you start investing in a mutual fund. The KYC process can be done online. You need to fill out the KYC registration form online and submit it with the self-attested identity and address verification. You must then visit the website of the fund house and select the mutual fund scheme.

Examples of companies that offer direct stock purchase plans are Walmart, Starbucks, and Coca-Cola. Similar to the brokerage model, investors initiate the direct stock purchase by transferring money from their checking or savings accounts, and the money is used to purchase shares.