Even before a few years, the term ONLINE was seen as a skeptical thing by many of us in India. The issue of trust was a major thing when dealing online. But nowadays the scenario has changed. Starting from mobile recharge to shopping everything is done online mainly in the tier-1 and tier-2 cities. While everything is now purchased online, why not mutual funds too. In this post let me discuss the procedure of how to invest in mutual fund online for the maximum gains.
Rahul is an AMFI Certified MF agent and he has an office in Bandra, Mumbai. He has many clients who visit him for investing in mutual funds. Rahul has good knowledge and he also helps his clients in choosing the best fund according to their investing capacity. For this service, Rahul earns in 2 ways, first, the MF company pays him an upfront commission of around 1.5% and second the company pays him a trail commission per year, that varies from 0.25% to 1%. So with an AUM of 10 crores, an MF agent like Rahul easily earns at least Rs. 5,00,000 per annum only from trail commission. How wherefrom is Rahul eaning these commissions? He is earning this from his client’s profits.
So it is obvious that a part of the returns of Rahul’s clients is actually going to Rahul as commission. So if there is a way for the clients to bypass Rahul and still get good advises, they can earn even more out of their investments. Let’s consider the case of an apple. If we can directly buy the apple from the farm it would have cost much lower. But whenever we are buying the same apple from the supermarket it will cost more as the supermarket’s commissions are added to the price of the apple.
Similar to the example of the apple, if we can buy the mutual funds directly from the MF companies, we can save the commission paid to the investment advisor. In 2016 alone, MF distributors were paid Rs. 5000 crores as commission. This commission can make a huge difference when the amount of investment is high and we save for a longer-term. So how can we invest in mutual funds that can fetch more returns for us? It’s possible only if we invest online. Now, how to invest in mutual fund online?
We can invest in a mutual fund online in 2 ways. Either visit each mutual fund company’s website and buy from them or find a portal that offers all mutual funds in the same place so that we can research and compare between funds before we make a decision. But, how to invest in mutual fund online from such a platform that offers MF buying at zero commission? Is there a platform exists? Let’s meet at Ravi.
So, Ravi is a mutual fund investor who purchases direct mutual funds. But he does not purchase the funds from each and every fund house’s website. Rather he has found a platform called Zerodha Coin, where he can compare and purchase mutual funds at no brokerage.
How to invest in mutual fund online through Zerodha Coin And What The Advantages?
Zerodha Coin is an online platform that allows you to purchase mutual funds without any commission. How much is Ravi saves on Coin? Suppose he has a Systematic Investment Plan (SIP) of Rs. 5000 monthly for the next 25 years. Suppose the stock markets give us the same return as it has given in the past. It is proven that Ravi can save a whopping Rs. 28 lacs over the 25 years term. This makes a real difference.
Therefore, the Coin does not charge any brokerage. The first Rs. 25000 investments in Coin is absolutely free. After that Coin will charge a mere Rs. 50 per month that is negligible. We have checked that Ravi can save that Rs. 28 lacs even after paying the small charge to Coin. With Coin, Zerodha sells direct mutual funds in Demat form. The process is just like buying or selling stocks. They can offer this service at such a low rate because they have very little marginal overheads in running the platform.
So we have discussed how to invest in mutual fund online. Now we will see the investing process in Coin platform. In Coin, you can start or stop any number of SIPs in a mouse click without any additional documents or NACH documentation. So the process of SIP is really easy. Another advantage of Coin is that it uses the Demat account to view the entire portfolio of stocks, bonds, exchange-traded funds, and mutual funds. Ravi also has setup NAV tracking orders to enter and exit automatically. So he lost his no single profit opportunity.
Now we have discussed the advantages of investing in mutual funds using Coin. Now let’s check the procedure of how to invest in mutual fund online through Coin. To start investing you need to login to coin.zerodha.com.
After opening, you can log in with the same credentials of your Zerodha Kite. If you are not sure which und to buy, you will get clear recommendations in the Coin dashboard. As you are getting the recommendations, you don’t need an advisor like Rahul anymore as the platform itself tells you which fund to invest in. See the image below to know how to get the recommendations.
Now, you can invest in any fund by searching for the fund on the Coin dashboard and then you can choose the lump sum or the SIP option. The approximate return over the years will also be displayed on the Coin platform.
Mutual Fund FAQ
Mutual funds are considered as one of the safest and profitable investment routes in the Indian market. Today’s generation is the digital-based generation. So, online investment in mutual fund become popular among investors. It is absolutely safe and secure process. You just need to be careful in choosing your broker or fund house.
To start investing in mutual fund online, you have to open an account under a broker. There through Demat account, you may invest in online. After opening an account, start invest in fund houses. You may check your entire account details and transactions by using your online back-office system.
To open a SIP account, you need to follow the steps below:
Step one: First, complete the KYC (know your customer) formalities.
Two: Register for a SIP (Any).
Three: Select the right SIP
Four: apply for it.
Beginners must choose to play safe. SIP (systematic investment plan) is the best way to invest for newbies. Start with small risk and go for bigger.
So, we have discussed how to invest in mutual fund online. You need a Zerodha account to start investing in Coin. However, if you do not have an account in Zerodha you can open an account instantly with Aadhar card. To get a call back regarding account opening CLICK HERE. You can ask me any questions on Zerodha Coin and mutual funds and I will be happy to answer your queries in the comments section below this post.