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Investing in mutual funds can be done through two ways – regular funds or direct funds. Regular funds are bought through intermediaries like brokers, agents or financial advisors, while direct funds are bought directly from the mutual fund company or their online portals. In this article, we will discuss where and how to buy direct and regular mutual funds in India.
a)Buying Regular Funds:
Investors can buy regular mutual funds through various channels like banks, brokers, agents or other financial advisors. These intermediaries provide advice and assistance to investors in selecting mutual funds based on their investment goals, risk tolerance, and financial situation. They also help investors in filling out the necessary paperwork and assist in the transaction process.
For example, an investor can approach a bank and ask for assistance in investing in a particular mutual fund scheme. The bank will then assign a financial advisor or a relationship manager to the investor who will guide the investor in selecting the mutual fund scheme that suits their investment goals. The advisor will also help the investor in filling out the necessary paperwork and facilitate the transaction.
b)Buying Direct Funds:
Investors can buy direct mutual funds either by approaching the mutual fund company or through their online portals. The process is straightforward and requires the investor to fill out the necessary paperwork and provide the required documents. The investor can also make the payment directly to the mutual fund company's bank account or use the online payment option provided by the mutual fund company.
For example, an investor can visit the website of a mutual fund company and select the direct mutual fund scheme they want to invest in. The investor will then need to provide their personal and financial information and upload the necessary documents. Once the information is verified, the investor can make the payment online using various payment options like net banking, UPI or credit/debit card.
c)Conclusion:
Both regular funds and direct funds have their advantages and disadvantages. Regular funds provide the assistance of intermediaries in selecting mutual funds and managing the transaction process, but charge a higher expense ratio due to the commission paid to intermediaries. On the other hand, direct funds have a lower expense ratio and provide more control to investors over their investment decisions, but require investors to do their own research and analysis.
Therefore, investors should choose the option that best suits their investment goals, risk tolerance, and financial situation. It is important for investors to understand the difference between regular funds and direct funds and make an informed decision before investing. By understanding the benefits and drawbacks of each option, investors can make smart investment decisions that can help them achieve their financial goals in the long run.