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A mutual fund is a promising financial instrument that guarantees a specific return over a few years. By definition, a mutual fund is a group of stocks managed by a fund manager. Unlike trading or investing, mutual fund investments do not require in-depth knowledge of stock markets as the fund manager monitors all the activities in a mutual fund plan.
To invest in stocks and other assets, you might require a Demat account, which is extremely beneficial for managing and holding diverse portfolio assets. Demat accounts promote great accessibility and smooth and seamless transactions.
The technological evolution has eased the stock market’s functioning by grouping all together in a Demat account. At the same time, some adults may not be so fluent with technological devices. The unanswered question most of these individuals are concerned about is how to invest in mutual funds without a Demat account.
If you are looking for the same answer, you have come to the right place. Yes, you can invest in mutual funds without needing a Demat account, but investing in mutual funds requires several other means. This article covers various mutual fund investment strategies that do not require a Demat account.
No, a demat account is not necessary to invest in mutual funds in India. A demat account is particularly required for holding and trading stocks and exchange-traded funds (ETFs) in electronic form. On the other hand, you can invest in mutual funds through other means without needing a demat account.
Investing in mutual funds does not require a demat account because, in these cases, mutual funds are allotted in a physical or electronic statement format. which can be tracked and managed by contacting the respective fund manager. Therefore, a demat account is optional for regular mutual fund investors.
You can now buy mutual funds online without a Demat account through various other investment channels like Asset Management Companies (AMCs), Registrars and Transfer Agents (RTAs), or online platforms like Paytm and Groww. Banks and other financial institutions offer mutual fund investment options through official websites.
Let’s take a look at five different channels that allow mutual fund investments.
Asset Management Companies are financial institutions that offer the services of a variety of assets, including stocks, bonds, and other securities of investors, on behalf of a fee.
Anyone can visit their official website or respective offices to directly invest in their mutual fund plans. However, you may be required to verify your information through KYC by submitting the required documents to start investing in mutual fund plans.
Some of the popular asset management companies in India are Aditya Birla Sun Life AMC Limited, SBI Funds Management, and many others. These asset management firms handle the overall maintenance and regulation of investors’ mutual fund plans.
A registrar and transfer agent is a private firm that maintains asset records for asset management firms, investors, and other financial institutions. They track and operate all the functions, including transaction processing, statement of account, dividends and redemption payments, and many others.
You can purchase mutual fund plans offered by these RTAs by visiting the offices of registrars like CAMS, SAG RTA, and KFintech. These institutions facilitate the purchase of mutual funds plans without needing a demat account.
Investing in mutual funds has become highly popular with the introduction of online investment channels like Groww, Paytm Money, and others. These online platforms provide an easy-to-use interface without requiring a complex demat account process.
Investors only need to complete a one-time KYC process by submitting relevant documents. Once the KYC is verified, investors can explore multiple mutual fund schemes.
These online platforms offer a variety of features, including low fees, investment tracking options, real-time performance data, performance monitoring, and more. Some even include educational resources and personalised guidance to enhance the investment experience.
Major banks like SBI, HDFC, ICICI, and various financial institutions offer this convenient way of investing in mutual funds without requiring any demat account. This makes it accessible to everyday investors to contribute to their investment portfolio.
These financial institutions also help investors choose mutual fund plans through our personalised recommendations curated based on their financial goals and risks. This approach encourages investors who are more traditional and risk-orientated to pursue mutual fund schemes.
Distributors are financial institutions or advisors who assist in purchasing and selling mutual fund plans. Distributors guide investors by navigating the complexities of mutual fund selection, paperwork, regulatory compliance, and others.
You can directly set up a meeting with a distributor to plan your mutual fund investment. Distributors ensure that your investment goals align with your financial objectives. Distributors manage and look after all the paperwork required to facilitate the purchase of mutual fund plans.
While digital platforms are emerging, distributors are classified into two: online and offline distributors. Offline distributors are those who provide physical investment acknowledgements. Meanwhile, online distributors provide a smooth paperless experience.
Investing in mutual funds is a great way to expand your wealth portfolio. Begin early by setting financial goals, whether it’s saving for retirement, education, or child care. Select mutual fund plans that align with your financial goals and risk tolerance. Investing early in mutual funds will allow the power of compounding to work in your favour, and a longer time frame will overcome the market fluctuations.
While investing, managing risk factors is crucial. Diversification is one of the keys to minimising the risks associated with mutual funds. Spread across your investments in various asset classes. This will help to balance against various economic conditions.
As we all know, mutual funds guarantee long-term benefits; it would be ideal to invest for a longer period to reap greater rewards. Long-term investing requires discipline and the habit of consistent investment. Cultivate the habit of consistency by choosing systematic investment plans, as they offer the best approach to growing your investment portfolio. SIPs harness the power of compounding while reducing the stress of timing the market.
SIP, also known as a systematic investment plan, is a type of investment approach designed to develop a habit of consistent investment for the users. Systematic investment plans not only cultivate a disciplined approach but also have the advantage of compounding power to generate wealth over time.
A systematic investment plan is the practice of investing a considerable or fixed amount of money during each interval for a predetermined. For example, a monthly investment of ₹10,000 in mutual stock is considered an SIP investment.
Investing in mutual funds without a demat account through SIP is simple, as you only need to choose an investment channel that does not require a demat account. Through these channels, investors can make systematic investments regularly on a predetermined date. Foster the habit of investing consistently to take advantage of the SIP benefits.
Mutual funds are financial instruments that guarantee a specific return over time and are managed by a fund manager. Demat accounts are required for holding and trading stocks and ETFs in electronic form but are optional for regular investors.
There are five ways to invest in mutual funds without a demat account: Asset Management Companies (AMCs), Registrars and Transfer Agents (RTAs), online platforms like Paytm and Groww, and banks and financial institutions offering mutual fund investment options through official websites.
Investing in mutual funds is a great way to expand your wealth portfolio, starting early with financial goals like retirement, education, or child care. Select mutual fund plans that align with your goals and risk tolerance. Managing risk factors is crucial, and diversification is key to minimising risks.
Spreading investments across various asset classes helps balance against economic conditions. Long-term investing requires discipline and consistent investment. Systematic investment plans (SIPs) harness the power of compounding while reducing market timing stress.
Developing a habit of consistent investment is essential for long-term wealth growth. SIPs are the best approach to generating maximum profit throughout the period from mutual funds.
Now you have learnt about investing in mutual funds without having a demat account. Hurry up, define your goals, and choose a fixed investment plan. Select the desired investment channel to start investing today.
Hashim Manikfan
Hashim Manikfan is a professional financial content writer with extensive experience in creating engaging and informative articles on a wide range of financial topics. With academic background in Communication and Journalism, Hashim has published numerous articles aimed at educating readers on essential financial principles. His work covers areas such as financial markets, investment strategies, economic trends, and more. His writing style ensures complex topics are accessible and interesting, making financial literacy attainable for a broad audience.
