Things to know before investing online
Prime Minister Narendra Modi has announced a complete lockdown for the next 21 days. This should not act as a deterrent for the investors who are looking to invest. Investors can still invest online and use this fall in the market to make most out of it.
Nevertheless, before investing, you should know the basics of investing and also, about your mutual fund.
Basics of Mutual Fund and its types
Get yourself acquainted with mutual funds. As one size does not fit all, there are different types of mutual funds and you should know which type of fund suits you.
Current Investment Portfolio
Once you know the basic of mutual fund and its various types, find out the gap in your investment portfolio. Mutual fund investments can fulfil your existing investment portfolio. For example, if your portfolio has a higher equity weightage, you can always invest in the debt-dedicated mutual fund. Similarly, within equity, you can invest in different categories to make a more balanced portfolio.
KYC Formalities
Know-Your-Customer (KYC) registration is a onetime exercise that has to be done either online or offline. There are some mutual fund houses that are offering online or e-KYC. Before investing, you must be a KYC compliant.
Direct or Regular Plan
Since the beginning of 2013, every mutual fund plan has a direct and regular plan.
· Direct Plan: It is for investors, who are investing directly with the fund house or other platform offering a direct plan. It has less expense ratio as compared to the regular plan.
· Regular Plan: It is for investors, who invest in a particular mutual fund scheme through or with the help of an intermediary. It usually has more expense ratio than the direct plan as it involves commission paid to an intermediary.
Dividend option
Choose the option that you want:
· Growth Option: Dividend is not paid-out and the investor realises the capital appreciation on the investment (by an increase in NAV).
· Dividend Reinvestment: Dividend earned gets reinvested to buy additional mutual fund units.
· Dividend Payout: By using this option, the dividend gets transferred in your bank account.
Net-banking
Get your net-banking activated as it makes your online investment into mutual fund schemes convenient.
Lumpsum or SIP
Decide whether you want to invest periodically or as and when you have liquidity.