How to invest in Mutual Funds ?

Mutual funds pool money from many investors and invest in a diversified portfolio managed by professionals. They offer benefits like diversification, professional management, systematic investment (SIP), and easy liquidity (for open-ended schemes). For most individual investors, mutual funds make disciplined, diversified investing accessible.

• Diversification: Access to a basket of securities for a small ticket.
• Professional Management: Fund managers, research teams and compliance frameworks.
• Convenience: SIPs, systematic withdrawals, auto-debits and online management.
• Choice: Equity, debt, balanced, hybrid, ETFs, index funds and more.

Types of Mutual Funds

• Equity Funds: Invest primarily in stocks; higher long-term returns with higher volatility.
• Debt Funds: Invest in bonds, government securities — lower volatility, income focus.
• Hybrid Funds: Mix of equity and debt for balanced risk-return.
• Index Funds & ETFs: Passive products that track an index; cost-efficient.
• Liquid & Ultra-Short Funds: For short-term parking of cash.

Step-by-step: How to Start Investing in Mutual Funds

1. 1. Decide whether you need a distributor — and pick Direct vs Regular plan
   
   • If you have time & knowledge: Consider Direct Plans (lower expense ratio, no distributor commission). You must research funds and manage rebalancing.
   • If you prefer guidance:Engage a Mutual Fund Distributor or a Registered Investment Adviser (RIA). They help with fund selection, onboarding and paperwork; you’ll usually buy Regular Plans.

2. 2. Decide on Demat vs Non-Demat Holding: You can hold mutual funds either in:
   • Demat Form – inside your demat account along with shares and ETFs.
   • Non-Demat (Folio/SOA) – directly with the AMC or through MF Central.
   • Both methods are valid; non-demat is simpler for most mutual fund investors.
3. 3. Complete Onboarding and KYC:
   
   • If you’re working with a distributor, they’ll help you complete your PAN-based KYC and onboarding via eKYC or CKYC.If you’re investing directly, complete your KYC through the AMC, MF Central, or registrar platform (like CAMS or KFintech).
4. 4. Select Funds and Start Investing:
   
   • Choose funds that suit your goals and risk profile. Begin with SIPs or a lump-sum based on your financial plan.
5. 5. Set Up Auto-Debit and Monitor Regularly:
   
   • Register your bank mandate for SIP auto-debits and review your portfolio quarterly for rebalancing.

Demat vs Non-Demat (SOA)

Mutual fund investments in India can be held in either Demat or Non-Demat / Statement of Account (SOA) mode. Both are valid — your choice depends on how you prefer to manage your portfolio.

Non-Demat / SOA: Units are held directly with the AMC in folio form. It’s simple, free from DP charges, and remains the most common choice for investors. Consolidated tracking is available through MF Central, CAMS, or KFintech.

Demat Mode: Units are held electronically in your Demat account along with shares and ETFs. It offers a single view of all your holdings but may involve minor DP or maintenance charges depending on your broker.

Summary: Choose Non-Demat if you prefer simplicity and lower cost. Opt for Demat if you already use a broker platform and want all investments in one place.

Distributor & Advisor Services

Advantages

• Advice & Goal Planning: Good distributors help with risk profiling, asset allocation and periodic reviews.
• Consolidation & Execution: They can manage multiple folios, nominations, and paperwork.
• Access to research: Distributors may provide fund selection research and model portfolios.

Drawbacks

• Higher cost: Regular plans include distributor commissions embedded in the expense ratio, reducing net returns vs direct plans.
• Conflicts of interest: Commission incentives may bias product recommendations if the distributor is not independent.
• Quality varies widely: Independent advisors may be excellent; some sales agents have limited capability.

KYC & Documentation

KYC is mandatory for mutual fund investments in India. The KYC process has been centralised (CKYC) and can be completed online using e-KYC flows. Typical requirements include:

• PAN: Permanent Account Number — mandatory for KYC link and tax reporting.
• Proof of identity & address: Aadhaar, Passport, Driving Licence, Voter ID or utility bills (depending on the KRA/platform).
• Bank account details: Cancelled cheque or bank statement for mandate/auto-debit (NACH/ECS/UPI).
• eKYC options: Aadhaar OTP-based eKYC, video KYC, or PAN OTP flows are commonly supported by registrars and platforms. CAMS, Karvy/KFin and other registrars support digital KYC onboarding.

Once KYC is completed through a registered KYC Registration Agency (KRA) like CAMS KRA / Karvy KRA / KFin, you can invest across AMCs without repeating full KYC.

Platforms — Demat & Non-Demat Providers

Below is a concise but practical breakdown of popular platforms and their mutual fund offerings. Each platform evolves quickly — check the provider for the latest features and charges before deciding.

MF Central — By KFintech & CAMS

MF Central is a registrar-backed portal (CAMS / KFin) that allows folio-based investors to consolidate holdings across AMCs, download consolidated statements, raise service requests and transact without a Demat account. It is particularly useful for Non-Demat investors who want a single dashboard for all AMC folios. Sign up at MF Central.

MF Central simplifies folio management and service requests across AMCs for folio-mode investors — no Demat required.

Zerodha (Coin)

Zerodha’s Coin offers direct mutual funds and holds units in demat form. Coin focuses on low-cost direct funds and integrates with Zerodha’s trading ecosystem for a unified portfolio view. Key points:

Groww

Groww began as a mutual fund app and now offers equities and a broader wealth platform. Groww supports both direct mutual funds and has been rolling out Demat options to users, enabling consolidated holdings across investments.

Upstox

Upstox provides mutual fund investing alongside its brokerage and Demat accounts. Investors can hold funds in demat form and use the trading account for equities/ETFs as well.

Bank Platforms & AMC portals

Banks (HDFC, SBI, ICICI etc.) and individual AMCs provide direct investment routes. Banks often offer advisory and distributor services through their investment desks and have dedicated mutual fund apps (HDFC MF, SBI InvesTap, ICICI Direct etc.).

Mutual Fund Cut-off Times & NAV

Net Asset Value (NAV) applies depends on when the clearing/settlement system actually receives your money — not the moment you submit the order.

Equity, debt, hybrid funds

Short-term (liquid) funds

Redemptions

Redemption requests submitted before the cut-off (commonly 3:00 PM) are usually processed at the same business day NAV.

Practical points

• The key factor is the time the clearing/settlement provider confirms receipt of funds — orders placed earlier but credited late may get a later NAV.
• Refunds or sale proceeds are generally sent only to your primary linked bank account.
• To ensure a SIP starts on your intended date, set it up a few days in advance of the first execution date.
• Payment method and your bank's settlement behavior determine whether NAV is T−1, T, or T+1 (or later).