How to Start Investing in Mutual Funds Online in India

What Are Mutual Funds?

Mutual funds are an investment where money is pooled from many investors to invest in a diversified portfolio of stocks, bonds and other securities. There are different types of mutual funds you can choose to invest in based on your risk appetite and financial goals.

Mutual fund investments are passive investments where fund managers handle the investor’s fund and decide where to invest for maximum capital appreciation. Your mutual fund investments are reinvested, significantly boosting your investment value over the long term.

How Do Mutual Funds Work?

In mutual funds, funds are pooled from many investors to invest in securities based on the type of mutual fund. Mutual funds are managed by experienced fund managers who have a good track record of profitable investments. Investors don’t have to worry about research or managing their money, making it suitable for beginners in investing or investors who don't have the time to research or manage their portfolio themselves.

When you invest in mutual funds, you don’t get stocks, instead, you get mutual fund units. These units represent part-ownership of the underlying assets held in the mutual fund’s portfolio. The value of these units is presented by NAV (Net Asset Value). The NAV of mutual fund units changes daily as per the market performance of the fund’s investments.

Let’s say you invested in an equity mutual fund that invests exclusively in the Automobile sector stocks. In the event of any news or an occurrence, the stock prices of the Automile sector will fall, and the NAV of MF units will also fall. Whereas, if Automobile sector stock prices rise, so will the NAV of MF units.

Documents Required to Start Investing in Mutual Funds Online

Here are the documents required to start investing in mutual funds online.

• Identify proof
• Address proof
• Passport-size photos
• Bank account details
• Nominee’s details

Documents required for NRIs:

• Passport with a valid visa
• Overseas Address proof
• Inward remittance certificate
• FATCA declaration

Steps to Start Investing in Mutual Funds Online

You can invest in mutual funds online through two avenues: AMC’s website or the Upstox App.

Investing in Mutual Funds Through AMC’s Website

Step 1. Select the Asset Management Company (AMC) you wish to invest in.

Step 2. Visit the selected AMC’s website and create an account.

Step 3. Complete the KYC process by submitting the required documents.

Step 4. Based on your financial goal, select the type of scheme(s) you want to invest in and choose a method of payment, whether SIP or lump sum.

Step 5. Complete your payment and receive the mutual fund units in your demat account.

Investing Through Upstox

Step 1. Create an account with Upstox using the app or through Upstox’s website.

Step 2. Once all verification is done, your Upstox account will be created. Open the Upstox app and go to ‘Upstox for Investors’.

Step 3. On the homepage, click on “Invest in Mutual Funds”. You will see different fund types: Equity, Fixed Income and Hybrid.

Step 4. Select the type of mutual fund you want to invest in. Let’s say you picked ‘Equity’ funds, you will see different types of equity funds offered by various AMCs, such as Index Fund, Liquid Fund, Overnight Fund, ELSS, etc.

Step 5. Select the fund you want to invest in, and all fund-related information will appear on your screen. Choose payment method: One-time or SIP.

Step 6. If you opt for SIP, then pick the SIP amount. You also have the option of setting auto-increase SIP to boost returns.

Step 7. Click on ‘Continue’ and tap on ‘Confirm to Buy’.