> How to Buy Mutual Funds - Complete Guide for Beginners | Karvy Online  
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Learn the Basics of Mutual Funds

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How to buy Mutual Funds Online

Online investment in Mutual funds has become very easy and effortless process now days. Opening an online account is just a five minutes task now. However before getting into how to buy mutual funds, let’s first look at the checklist for it.

  • PAN
  • KYC
  • Bank account (net banking)
  • KYC compliant
  • Personalized Cancelled cheque leaf with MICR and IFSC code or bank account statement or passbook.

Today it’s compulsory for any investor to be KYC compliant to start investment in Mutual funds. So here is all you need to know about KYC.

KYC stands for Know your Customer. It is needed by SEBI in accordance to Prevention of money laundering Act, 2002. The requirement of KYC may change from time to time. The KYC process followed by Mutual fund AMC, distributors, Depositories, Stock brokers is same throughout the industry; KYC has to be registered with KRAs. KRA is KYC Registration Agency, registered with SEBI.KRA will manage all the KYC records of the investors on behalf of SEBI. Karvy is one of the KRAs with SEBI.

Once you register your KYC with any of the registrars, it will be valid at all other portals too. List of KRA in India along with their links:

  • Karvy KRA
  • CVL
  • NSDL KRA
  • CAMS KRA

Documents needed for KYC process

  • Recent passport size photograph
  • Proof of identity such as a copy of PAN card or UID (Aadhaar) or passport or voter ID or driving license
  • Proof of address passport or driving license or ration card or registered lease/sale agreement of residence or latest bank A/C statement or passbook or latest telephone bill (only landline) or latest electricity bill or latest gas bill, which are not older than three months.
  • The copies have to be self attested and then an IPV, in person verification is done where these documents are verified with originals.

Another way to do KYC is eKYC, Electronic KYC. KYC has been made easy with Karvy.

ekyc steps

Steps to register for eKYC

  • Register on investment.karvyonline.com
  • KYC status is checked automatically and displayed
  • If not KYC compliant, register for eKYC
  • Input adhaar number and mobile number linked to it to get OTP
  • Fill the form and accept terms and conditions.

Once you register your KYC either by physical or electronic mode, the next step is to choose whether you want to invest in offline or online mode.

As online mode is very popular these days few people still believe in investing the conventional way.

Offline investment is done is paper form where you can approach to any of the Karvy branches of and submit physical application forms and start investing

The disadvantages of investing in offline is every time a statement is needed you want to know current value of your investment of want to redeem you funds for every small request you have to approach the nearest branch.

A lot of times those investors who don’t have online tracking of their mutual fund investments end up losing money because it’s difficult for them to keep a check the effect of market activities on their investments.

Online Mutual fund investment on the other hand does not have all the above difficulties. Let’s look at some of the benefits of online investments:

• Online tracking of investments anytime anywhere.

At Karvy platform , you can buy or sell you investment with just once click , know the current market value of your investments ,choose SIP or lump sum investment option and many more.

• Secured way of investment

You deserve a worriless life. Stop worrying about losing you statements to rats or forget about your habit of forgetfulness.

• Check Status of your investments

With one log in you can track your order status, when did you start the SIP, how much amount has been invested, when will the units be allotted etc.

• Purchase NFO and NPS online

At this amazing platform of Karvy, you can now invest in and new fund offers online. Once NFO units are allotted you can track the change in NAV anytime.

• One stop shop

Online investment brings you the comfort of investing in all the AMC from one platform, you don’t have to waste your time running to different mutual fund providers to purchase or sell.

• Easy to Use

At Karvy online investment platform, things has been simplified for the users, you don’t have to be a tech savvy person to invest online, the user interface is very simple and interactive and one can easily navigate to different options shown on website to invest.

• Easy to transfer money

Online investment account at Karvy allows you to link upto 4 bank accounts for your transactions, this feature help you to invest from the linked bank account and at the time of sell money get back to your account in t+3 working days (t= transaction). All this can happen only with few clicks if you have Net banking facility.

• Expert Advice

If you are confused or need a second opinion, we have experts available on the platform to guide you. All you have to do is click on option.

• Investment Statement

You can instantly download your statement for the investments done by online investment account. Now you have understood the benefits of investing in mutual fund online. Here are the different investment options available in mutual funds. Any investor while investing in mutual funds has to select one of the below 3 options usually that are mentioned in brackets along with the name of the fund.

Growth option:

One of the most popular investment options is growth, where there is no dividend declared by mutual fund asset Management Company and you it will grow till the time you keep yourself invested in it. There is no intermediary realization of profits. Any generated profit or loss is given to the investor only at the time of redemption of the fund. Growth of the fund is shown in terms of increase in value of NAV (net asset value) of the fund from the day money was invested till the time you redeem it. Number of units remains same throughout until some new money is pumped in.

Dividend Payout option:

Dividend Payout is mostly used by people who are looking for regular income or interested in getting interim payout. Dividend is sharing of profit generated and distributed in proportion of the units held by the investor. Dividend is a part of profit which is paid out and it affected NAV of the fund as well. Investor has convinced to choose monthly, quarterly or half yearly dividend payment option. Dividend payouts are not guaranteed, it completely depends on performance of the fund and market appreciation. In case the fund is facing performance losses they may not issue any dividends.

Dividend Reinvestment option:

In this option, dividend is not paid out to the customer, it is rather re invested in the same funds and investor gets more units allotted to him at the prevailing NAV. Like dividend payout option, here also dividend is not guaranteed.

It’s very important for an investor to look at taxation of each option while choosing fund.

The rates are applicable for the financial year 2018-19 and subject to enactment of the Finance Bill,

2018 INCOME-TAX IMPLICATIONS ON DIVIDEND RECEIVED BY UNIT HOLDERS

Individual/ HUF   Domestic Company NRI
Dividend Dividend
Equity oriented schemes Nil   Nil Nil
Debt oriented schemes Nil   Nil Nil
 

Rate of tax on distributed income (payable by the MF scheme)
Equity oriented schemes 10% + 12% Surcharge + 4% Cess 10% + 12% Surcharge + 4% Cess 10% + 12% Surcharge + 4% Cess
= 11.648% = 11.648% = 11.648%

CAPITAL GAINS TAXATION

Individual/ HUF Domestic Company NRI
Equity Oriented Schemes
Long term capital gains 10% 10% 10%
       
Short term capital gains 15% 15% 15%

How to buy and sell mutual funds?

As we have already made a checklist in the starting, let’s begin investing.

There are 2 ways one can invest, namely net banking and emandate.

Net banking is the process that can be used for both SIP and lumpsum , for this it’s mandatory to have net banking and you bank should compulsorily have iSIP facility to register biller for further ECS. The first payment will be done will first time net banking login however for further deduction of funds from your account it’s very important to register the unique registration number in you net banking.

How to register URN?

Please find below the process to register the URN number in your bank account:

  • Login to your net banking account
  • Click on Bills/Biller/Bills and Pay
  • Register New biller
  • Select business category as Mutual Funds
  • Select the mutual fund AMC used for investment
  • Enter the URN number received in your email and mobile number in the empty text box
  • Tick “Auto Pay” option and enter an appropriate amount below which amount will be automatically debited every month
  • Enter your user id and transaction password, click on add to complete the process

Another process which can be used for buying mutual funds online is emendate

What is E-Mandate and why?

E-mandate allows you to electronically authorize the debit order to the bank. In short, it helps you to allow the bank online for the debits of your SIP investments. It is very similar to an NACH mandate. It uses an electronic validation instead of a physical signature and is offered directly by individual banks. This facility is available with 100 banks.

It helps you to authenticate your debit mandate through an electronic medium (online) for auto-debit of SIPs, instead of going for a paper-based process. Therefore, you can process your mandate in lesser time by doing it online than doing it in physical mandate process.

Benefits of using emandate

  • This is an Online and paperless process of registering Online One Time Bank Mandate.
  • This registration can be done by all Individual Investors (Resident Indian & NRI excluding Minors) via Aadhaar based authentication through One Time Password (OTP) triggered to their mobile number registered with UIDAI.
  • For this facility your bank account should be linked with Aadhar.
  • Almost 99 % of the online investor details field will be pre-filled and the investor just has to enter the amount and modify the Mandate Expiry date if necessary hence enabling hassle free and quick platform for registration.
  • The investor’s signature will be captured digitally.
  • Post this quick and hassle free online One Time Bank Mandate Registration, our investors can do Purchase and SIP transactions seamlessly.
  • So, now you can register your debit mandate more easily and reap the benefits of investing through our platform. Our team has always been combining the efforts for making things productive for you. Each time we achieve something new for you, we share because we care.
  • This is an Online and paperless process of registering Online One Time Bank Mandate.
  • This registration can be done by all Individual Investors (Resident Indian & NRI excluding Minors) via Aadhaar based authentication through One Time Password (OTP) triggered to their mobile number registered with UIDAI.
  • For this facility your bank account should be linked with Aadhar.
  • Almost 99 % of the online investor details field will be pre-filled and the investor just has to enter the amount and modify the Mandate Expiry date if necessary hence enabling hassle free and quick platform for registration.

How to purchase mutual funds online?

It’s a 5 step process which is completely paperless.

  • Step 1 Verify you PAN for KYC if you are not KYC registered complete your eKYC
  • Step 2 Fill in KYC and FATCA details
  • Step 3 Bank details
    Be very careful and fill in correct account details because this bank account will be used for all your future payment related to mutual funds. Also upload a personalized cancelled cheque.
  • Step 4 Update nominee
    It’s always advisable to update nominee details and inform the nominee about the same.
  • Step 5 Verify the details and confirm; now you can start investing.

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