How to invest in mutual funds online

In the 90s, to invest in a mutual fund, you had to submit a cheque. However, this had a high error rate and resolving any issue was a lengthy process. Also, most funds were closed-end funds, which meant redemption was a real headache. Investing was as intimidating as rafting through rapids.

To add to that, fund houses would publish NAVs every three months – you’d have no clue if your fund was performing or not. Now cut to today, investing is as easy as buying clothes. You can pick a fund, and with a click on an app, it’ll become your investment.

Furthermore, selling is pretty easy, too. It is much easier than selling a second-hand pair of shoes. All you have to do is place a redemption request on the app – that’s it.

Mutual fund investing has transformed over the years, meaning you can start your journey right after finishing this article!

Why is defining your investment objective the first step?

Before you start investing, it’s essential to know why you want to invest. Much like planning a trip, where you decide your itinerary before booking tickets, defining your financial goals is the foundation of your mutual fund investment journey.

Ask yourself:

• Are you saving for wealth creation or retirement planning?
• Do you need a fund for your child’s education or building an emergency corpus?

Each goal comes with its own suitable fund choice. For example, a short-term goal like an emergency fund might warrant debt investments, while long-term wealth creation or retirement demands an exposure to some equity balanced with debt as well.

Suggested read: How to build your first mutual fund portfolio the smart way

What is the difference between direct and regular mutual fund plans?

Once your goals are clear, the next important decision is whether to invest through a direct plan or a regular plan.

• Direct plans have lower expense ratios because you buy units directly from the Asset Management Company (AMC) without intermediaries. This generally translates to better long-term returns.
• Regular plans involve distributors or advisors who earn commissions, increasing the fund’s expense ratio.

If you’re comfortable researching funds yourself and making investment decisions, direct plans are the more cost-efficient choice. On the other hand, if you prefer professional advice, regular plans may be more suitable.

That said, you can still invest in direct plans with Value Research Fund Advisor as your primary guide.

Suggested read: Direct vs regular mutual funds: Which one should you choose?

Which online platform should you choose for mutual fund investing?

Choosing the right platform can significantly impact your investing experience. Here are your main options:

• AMC websites: Best if you plan to invest in a few funds from specific AMCs.
• Discount brokers: These platforms aggregate funds from multiple AMCs, allow portfolio tracking, goal setting, and provide easy access to a wide variety of funds. One advantage they offer is that you’ll get the option of investing in a direct plan.
• Banks and brokerages: If you already have accounts with ICICI Direct, HDFC Securities, or Axis Direct, these platforms often provide mutual fund investing. However, they usually offer only regular plans.

How do you complete KYC for mutual fund investing online?

Earlier, you needed to do multiple KYCs for investing in different funds. However, the good news is that the KYC process needs to be done once. And you can complete this online:

• Use your PAN card and Aadhaar for verification.
• Mobile number linked with Aadhaar enables OTP-based verification.
• Some platforms require video KYC for enhanced security.

Keep your PAN, Aadhaar, and bank details handy to speed up the process.

Also you can also carry out this process through a mutual fund distributor. They’ll take care of other aspects of your investment journey as well. 

Suggested read: How to simplify your fund transactions with MFCentral

Should you start with SIP or lump sum investment?

Systematic Investment Plans (SIPs) are ideal for beginners and salaried investors:

• Invest small amounts regularly (as low as Rs 100/month).
• Benefit from rupee cost averaging, which smooths market volatility.
• Encourage disciplined investing aligned with your goals.

Lump sum investing should be a last resort in equity funds and hybrid funds. However, for debt funds, they’re still a viable option.

Suggested read: SIP vs lumpsum: There's one clear winner!

How do you make payments and begin investing online?

Setting up your SIP is simple:

• Link your bank account for auto-debit.
• Choose convenient payment modes like UPI or net banking.
• Decide SIP start date and frequency (monthly, quarterly).
• Use platforms powered by BSE Star MF or NSE NMF for seamless execution.

Once set, your investments happen automatically without daily intervention.

How should you track, review, and stay invested?

Mutual fund investing is a long-term game. Use your platform’s dashboard or mobile app to monitor:

• NAV (Net Asset Value) changes.
• SIP contributions and status.
• Fund performance against benchmarks.

Review your portfolio every 6 to 12 months or after major life changes. Resist the urge to react to short-term market noise; instead, focus on your goals and investment horizon.

However, to gain a complete view of your portfolio, you can try our Portfolio Manager. It offers insights into asset allocation, performance, along with tax incurred.

Suggested read: How long is long term?

Conclusion

The digital age in India has made investing highly accessible. Yet, success demands clarity of purpose and disciplined execution. By following the steps outlined – defining your goals, choosing direct plans, selecting the right platform, completing KYC, picking funds wisely, and staying committed – you set the foundation for a rewarding investment journey.

However, with how easy it has become to buy mutual funds, it is also equally simple to sell them. That said, you should avoid falling prey to short-term market noise. Instead, your goal should be to stay invested through the ups and downs of the economy. 

If you find it challenging to build a portfolio that instils confidence in you, then Value Research Fund Advisor is a great service. We offer personalised recommendations that reflect a thorough understanding of your investment goals and financial needs. Steady wealth creation shouldn’t be so challenging, right?

FAQs

1. What is the difference between direct and regular mutual fund plans?

Direct plans allow you to invest directly with the Asset Management Company (AMC) without intermediaries, resulting in lower expense ratios and generally better long-term returns. Regular plans involve distributors or advisors who earn commissions, increasing costs. Direct plans are ideal if you prefer managing investments yourself, while regular plans suit those seeking professional guidance.

2. How do I complete KYC for mutual fund investing online?

KYC can be completed once online using your PAN and Aadhaar for verification. OTP-based verification is done through your mobile number linked to Aadhaar. Some platforms may require video KYC for added security. You can also complete KYC through a mutual fund distributor who can assist with other aspects of investing.

3. Should I start investing with SIP or lump sum?

SIPs (Systematic Investment Plans) are recommended for beginners and salaried investors as they allow investing small amounts regularly, benefiting from rupee cost averaging and disciplined investing. Lump sum investments may be suitable during market corrections or for debt funds, but should generally be avoided for equity or hybrid funds by new investors.

4. Which online platform should I choose for mutual fund investing?

You can invest through AMC websites if you want to focus on a few funds from specific AMCs. Discount brokers like Zerodha Coin, Groww, or Kuvera offer access to multiple AMCs with portfolio tracking and goal-setting features. Banks and brokerages typically offer only regular plans and suit existing customers.

5. How often should I review my mutual fund portfolio?

It’s advisable to review your portfolio every 6 to 12 months or after major life events. Avoid reacting to short-term market fluctuations. Focus on your financial goals and investment horizon to maintain discipline and long-term growth.

Also read: Ready for disruption

This article was originally published on May 30, 2025.