In an era plagued by an erratic financial climate, mutual funds have arrived as a breath of fresh air. Not only does it offer higher monetary returns but also provide people with an opportunity to own a diversified and a professionally managed basket of securities at a reasonably low cost. This is why mutual funds are considered to be one of the most viable investment options in the market today.
All mutual funds currently available offer two kinds of investment plans – Direct and Regular. Many people involuntarily invest in the regular one because they are mostly unaware of the distinction between the two. Also, in most cases, they are completely oblivious about the benefits associated with a direct plan.
Therefore, before you decide to take the final call, it is essential to understand what a direct plan truly entails and how it is different from a regular plan.
What Is Direct Mutual Fund?
A direct mutual fund, as the name itself suggests, is a fund in which you can invest directly. This means that you don’t need to route your transaction through an intermediary like a distributor, banker or a broker. Instead, you can directly approach the asset management company and invest with them.
There are many advantages of choosing best direct mutual funds over the regular one. As the fee paid by the asset management company to the distributor is not charged as a part of the plan, direct plans furnish up to 2% higher returns. This results in it having a lower expense ratio which can further lead to better saving options.
Additionally, despite the size of your investment, direct fund platforms provide for a fixed annual fee so that your yearly earnings remain steady, stable, and secure.
If you want to invest in a direct mutual fund, you must remember that there are two ways of doing so. You can either go for the routine offline investment or explore the online way.
Here is a step-by-step guide which will help you in deciding so that your transaction can be seamlessly facilitated.
How to Invest in Direct Mutual Funds Online?
- To begin with, create a mutual fund investment account on the asset management company’s website or with an online investment platform.
- For this, you will be asked to complete your Aadhar based KYC formalities. You will also have to link your PAN card with the said investment account.
- Once the account is functional, you can browse through the different types of direct plans available within the key categories of debt, equity, and hybrid.
- You will now be asked to choose between a lump sum, a SIP or an STP investment. If you are a new investor, go for either a lump sum or a SIP investment. These ensure long-term benefits. However, if you are an existing investor, select the STP process. This will enable a quick shift of plans from a regular to a direct one.
- Next up, you will have to furnish your basic contact details and provide for a mode of payment.
- After the payment is processed, your direct mutual fund plan will be activated immediately.
The online system of investment is much more comfortable than the paper-based plans because of its speed and convenience. Moreover, investors can also avail the benefit of getting a NAV on the same day if the investment is made well before the scheduled cut-off time.
How to Invest in Direct Mutual Funds Offline?
- Get in touch with an asset management company, a mutual fund utility or an investment adviser.
- Procure an application and a KYC form from them.
- Fill out the form and provide the information asked for. This would primarily consist of your name, address, e-mail id and other contact details. Also, attach a photocopy of your PAN card.
- Submit these documents to the company/utility along with a demand draft/cheque of the amount you want to invest in the direct mutual fund.
- The AMC or the MF utility you have approached will then allocate a folio number to you based on which you can track your transaction.
- It would take about seven working days to complete the entire process. At the end of it, you would be provided with an account statement which would contain all the details about your investment.
Though the offline process takes a little longer, it provides an investor with the additional benefit of getting direct financial advice from the company/utility. This helps them clearly define their fund planning strategy and narrow down their investment options.
Why Oro Wealth?
Oro Wealth is an online platform which provides you with smart, effective, and efficient direct fund opportunities at zero commissions. It helps you maximise your investment potential with its predictive technology, time-tested strategies, and an exceptional instinct of financial advisors derived from years of experience and expertise.
Mutual funds today constitute an integral part of our financial ecosystem. It is a reliable instrument to invest your savings at a low price and yet yield high returns. However, availing the direct fund option would always ensure that you reap greater and significantly better monetary rewards.