How do Mutual Funds Work Online?

    A mutual fund house pools investments from different sources with common investment goals. Then it invests this collective amount in securities like money market instruments, bonds, stocks, commodities including valuable metals and similar other assets.

    Financial experts known as fund managers manage investments in these funds. For that, the fund house charges a nominal annual maintenance fee called the expense ratio.

    Investors can earn through regular interest or dividends in capital gains. They can even reinvest the capital gains using a growth option.

    When it comes to investing in mutual funds, you can do it fast and most easily online. Then you can also use smart digital tools associated with the management of funds, like a mutual funds SIP calculator that shows your estimated returns.

    That being said, here’s how mutual funds work online.

    Top Ways to Invest in Mutual Funds Online

    By opening an account on a fund house’s official website

    On the official website of an asset management company (AMC) or fund house, you can choose from several mutual funds of different categories to invest in.

    To create your account on the site, simply go by the given instructions, fill in all the necessary information and submit the same.

    You can even complete the mutual fund KYC procedure on the website (e-KYC). For that, only your PAN and Aadhar number are required. Once your information is successfully verified online, you can begin investing.

    If you prefer investing offline, see whether the AMC offers this facility.

    Via the app of the AMC

    A fund house lets you invest in mutual funds online through its own mobile application as well. This makes the process fast and hassle-free.

    The app allows you to:

    • View account statements
    • Check other important details relevant to your investment portfolio
    • Purchase or sell units
    • Invest in various fund schemes

    How to Start SIP Investment Online?

    After signing up with the AMC website/app, you can select the investment mode, lump sum or Systematic Investment Plan (SIP). In the first case, you need to deposit the whole amount in one go. In the second case, you can deposit a fixed amount at specific regular intervals (monthly, quarterly or every 6 months) on a certain day. Since SIP investments are systematic and help beat inflation by averaging out your savings, investors often prefer this mode.

    If you wonder how to start SIP investments online, follow these steps:

    • Decide the amount of investment, a suitable scheme plan and option.
    • Choose the mode and date of payment.
    • Submit your transaction.

    Then you can use the mutual fund SIP calculator offered by the AMC to auto-calculate your estimated returns from your investments. For that, you simply need to enter:

    • The investment amount
    • The annual rate of returns
    • The investment tenure

    There are certain associated charges when you invest in mutual funds online on the app/site of an AMC. Usually, these include expense ratio, one-time transaction fee, exit load, securities transaction tax, and stamp duty. Make sure to learn about all the applicable charges before beginning your investments.