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How to buy mutual funds online without a demat account

Mutual funds have gained huge popularity among investors in recent years. This is partly because the investment is straightforward and there is scope for diversification. They are good investment options for both beginners and mature investors. Besides, there is a wide range of mutual funds to choose from.

Once you have shortlisted the funds you would like to invest in, you might wonder how best to go about it. Many investors make their mutual fund investments through a demat account. But there are other ways to consider as well. If you are thinking about how to buy mutual fund without demat account, you can opt for any of the following options.

Read more: How to transfer shares from one demat account to another

How to buy mutual fund without demat account

Through the asset management company’s website or office:

Most mutual fund companies offer the product on their website. So, if you are wondering how to buy mutual funds online without demat account, here is the key. However, you will have to make one physical visit to the fund house. Submit the application form along with a copy of your PAN card, initial cheque amount, and KYC documents. After this, you will be allotted a PIN number and a folio number. Use these to make any further transactions through the asset management company’s website.

The drawback is that you will have to repeat the application process with every fund house that you approach. Managing multiple folio numbers and PINs can be confusing.

Independent portals:

Various independent portals offer a list of mutual funds. You will need to register online and open an online account. Most of these portals will require you to take a printout of the application form and submit it. The portal will also do your KYC if this has not been done before. Once your login is created, you can easily buy or sell the funds online. Such portals also provide an online platform where you can keep a track of your investments.

You may face problems if the portal does not have a tie-up with your bank. In this case, the net banking option may not be available and you may have to use other payment options like credit card.

Read more: How to trade in the stock market for beginners

Registered mutual fund adviser:

Thousands of mutual fund agents are registered with the Association of Mutual Funds in India (AMFI). You can find the list of these agents on the AMFI website. Such agents may even visit your home to help you find the best funds to invest in. These advisers can guide you about the latest schemes or changes in the market. They will even submit your forms for you. You should search for the agents on the basis of their experience, qualifications, and knowledge.

The key here is to find the best adviser. There are many advisers who are registered but not very active. Such advisers may not be able to help you in differentiating between good and bad schemes.

Transfer agents like CAMS and Karvy:

If you don’t want the hassle of visiting every asset management company or finding the correct adviser, transfer agents are the best bet. These are offices that act as an intermediary between you and the mutual fund company. They act as a point of contact and can help you submit the different forms. Transfer agents have complete information on new fund offers and existing ones. They do not charge any money from the investor but get their share of money from the company. They act as recordkeepers and can provide you with all the consolidated mutual fund statements whenever you need them.

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One of the most popular ways is to visit your bank and ask if they are selling the mutual fund you are interested in. Banks are mutual fund agents too. Just beware of mis-sellers who might persuade you to invest in certain funds in order to get their maximum commission. This option is best when you have decided which mutual fund to buy.

Using a demat account to invest in mutual funds

Demat accounts are largely used for trading in equity shares. But you can also use a demat account to invest in mutual funds. There is ease of use and a nominal amount is charged at the time of the transaction. Besides, you can see all the consolidated reports of your investments in just a few clicks. Once you have bought the mutual fund units, you can sell them and invest in the new funds without having to visit any office. You can open a demat account easily and start investing from the comfort of your home.

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