Mutual Funds

A mutual fund is a type of investment instrument that combines investors’ funds to invest in securities such as stocks, bonds, money market instruments, and other assets. Professional fund managers manage your portfolio by allocating the assets and generating capital gains or income. Mutual funds are classified into Fixed Income or Debt Mutual Funds, Equity Mutual Funds and Hybrid Mutual Funds.

Yes, you need to open a demat account to buy mutual funds on 5paisa. With a demat account, you can experience the convenience of investing and managing your portfolio anywhere and at any time.

With 5paisa you can open two types of accounts – An All-in-one Account & Mutual Fund Account

Both the accounts have basic KYC document requirements like –

• Pan Card


• Aadhar Card


• Bank details


• Signature (in digital form)
  

Currently, the online facility to update nominee details is not available on 5paisa Platforms.

To update the nominee

1.Go to 5paisa’s Download forms section
2.Download the nomination form
3.Fill in the details
4.Send it to us at our registered office address

Yes, you can stop or cancel your mutual fund SIP payments at any point. You can stop SIP using the following steps:

1.Go to MF order book
2.Click on the SIP section
3.Click on the scheme you wish to stop
4.Click on Stop SIP
5.Choose a reason and click on the stop button.

Mutual fund investments offer returns for you in two ways — via capital gains and dividends. Making money via capital gains in the mutual market is similar to the stock market. The difference is that instead of buying a stock, you buy a mutual fund unit comprising multiple securities. As the unit price rises more than the buying price, you can sell the unit and make a profit.

Moreover, if your fund invests in equity, you also enjoy the dividends announced by the companies. You can either cash these returns or reinvest them; experts suggest doing the latter to continue the compounding process.

​Mutual fund withdrawals in India are taxed based on the fund type and holding period. For equity funds, short-term gains (held ≤12 months) are taxed at 20% and long-term gains (>12 months) at 12.5% beyond ₹1.25 lakh. Debt fund gains are taxed per your income slab. ​

Consider the following factors before you buy mutual funds online:

 

• Investment Objectives: Your investment’s goal.
• Risk: Understand your risk appetite and how risky your fund is.
• Fund Performance: Verify that your fund has delivered consistent returns.
• Expense Ratio: The percentage of your investment fund house levied by the fund company is known as the expense ratio.
   

Professional money or fund managers manage mutual funds at 5paisa. They pool the money invested in the same instrument by other investors and invest it on your behalf into various asset classes. They make investments based on the scheme’s objectives and decide when to buy or sell a specific security expertly.

• Performance consistency
• The fund manager’s background
• The reputation of the AMC you’ve picked.
• The distribution of assets

Yes, mutual funds can be profitable. However, selecting an appropriate fund and investing for the long term is crucial. To select the best fund and monitor your progress over time, you can utilise our mutual fund calculator.

Except for some retirement funds and ELSS (equity-linked savings plans, often known as tax-saving funds), mutual funds are not tax-free. The gains are taxed according to the holding period as short-term and long-term capital gains.

You can start by choosing the best platform to invest in mutual funds, financial apps or directly through mutual fund houses. For example, you can invest in mutual funds through SIPs (Systematic Investment Plans) or lump sum investments through the best mutual fund investment platform, 5paisa.

Factors to consider are your risk appetite, investment goals, financial goals, fund manager expertise, investment duration, past performance and how your investments will be taxed. It is also important to understand the type of mutual fund (equity, debt, hybrid) you’re investing in and prepare an investment strategy before investing.

Yes, 5paisa offers commission-free mutual fund investments through its direct plans. Investing directly with Asset Management Companies (AMCs) via the 5paisa platform allows you to avoid commission fees, ensuring you maximise your returns.

No, according to SEBI and CSDL guidelines, you can’t add another investor to your existing account. However, you can open a joint demat account with up to three account holders (one main holder + 2 joint holders) at the time of opening your account with us.

You can transfer money for mutual fund investments on 5paisa through easy payment methods like UPI, net banking or using your bank account through ECS. For SIP investments, 5paisa also allows automated payment deductions, making the entire process simple and convenient for users.

Offsetting capital gains is one of the most efficient ways to reduce your tax liability on both short and long-term capital gains. Here, long-term or short-term losses are used to reduce your overall returns, which reduces your tax liability.

For example, if you have invested ₹3 lakhs in mutual funds on 1st January 2024 and your investment decreases to ₹2.6 lakhs on 4th March 2025, your long term capital loss will be ₹40,000 in redemption.

This can now be offset by any gains you book in the same year. So, if you get long-term capital gains of ₹1.67 lakhs (₹42,000 over the exemption limit) from another mutual fund, your tax payable will be ₹250.

Here is the calculation –
Long Term Capital Gains: ₹40,000 - ₹42,000 = ₹2,000 

Long Term Capital Gain Tax = 12.5% of ₹2,000 = ₹250

Mutual fund investment works by pooling funds from multiple investors and investing them in diverse assets. Since your investment amount is invested in diverse sectors, the risks are minimised, and gains are maximised.

With 5paisa, you can start your investments as low as ₹100. The minimum investment amount required for SIP investments is ₹500, and for lump sum investments, it is ₹100.

Yes, NRIs can invest in mutual funds through 5paisa by providing updated KYC and NRE/NRO bank account details. We also support direct investments or through a Power of Attorney (PoA).

When you redeem your mutual funds, your accumulated units are sold based on the applicable NAV in exchange for money. The gains earned through your investment are transferred to your registered bank account after the process is completed.

We follow the standard industry cut-off times: 3 PM for liquid funds and 7:00 PM for overnight funds. Transactions made after these times are processed with the next business day’s NAV. Always confirm specific cut-off times on the platform.

We support all major banks for NET banking transactions. Some of the popularly supported banks include HDFC Bank, ICICI Bank, SBI, Axis Bank and Kotak Mahindra Bank. Check our mobile application or website for a complete list of supported banks.

SIP, or Systematic Investment Plan, is investing in your chosen mutual fund scheme at regular intervals, such as monthly or yearly. It helps you create a disciplined investment strategy by investing a pre-set amount of money on a fixed date.

On 5paisa,  you can choose any date for your SIP from the 1st to the end of the month according to your cash flow. The dates typically chosen are 1st, 7th or 25th – but you can choose a date that aligns with your schedule.