Back to Chapter List

Chapter 6 How Do I Invest in Mutual Funds?

One Time Documentation

One starts by doing a one-time KRA or KYC [Know Your Client], through a registered broker or approved intermediary. Once the KYC is done, one can start buying and selling mutual funds at the click of a button.

Filling Up the Application

Contact details, bank account number and bank details have to be clearly specified in the KYC. Dividend and redemption proceeds are directly credited into the bank account. Also, this prevents any fraudulent encashment of cheque / draft issued to the investor.

Supporting documents

Copy of PAN card and KYC is mandatory for investing. Aadhaar card copy can be given as a valid identity proof. One cancelled cheque is needed for bank account registration in case of SIPs.

Mode of Investment

One can make the payments through cheque or online transfers. Third party payments are not allowed in a mutual fund (the only exception to this is being a guardian wherein one can invest on behalf of a minor applicant). All payments have to be made from the investor’s bank account registered with the AMC.

Appointing a nominee

Entering nominee details is important to ensure that the holdings can be transferred to surviving joint holder / family member / friend, in the event of demise of the primary holder. In case the nominee is aged below 18 years, then guardian’s name has to be mentioned on the form. Any change in these details should be informed to the mutual fund immediately.

Folio Makes Life Easier for the investor

A mutual fund creates a new folio with a unique identification number for each unique investor. This folio can be used to make additional purchases or redemptions and to track ones investments. Once a folio has been created with the mutual fund house, subsequent transactions with the same mutual fund do not require form filling and documentation.

Redeeming is easy

One needs to fill the redemption (withdrawal) form and hand it over to the distributor in person or online. For equity and debt funds, the cut-off time is 3 pm for the current day’s NAV.

Key Takeaways

  • One starts by doing a one-time KRA or KYC [Know Your Client], through a registered broker or approved intermediary.

  • One can make the payments through cheque or online transfers.

  • One needs to fill the redemption (withdrawal) form and hand it over to the distributor in person or online.

1 2 3 4 5 6 7 8 9