How to Invest in Mutual Funds Directly: The Beginner’s Guide to Mutual Funds

Investing in mutual funds is probably the best way for an individual to increase wealth over a long time. Additionally, direct mutual funds offer an investor opportunity to receive maximum returns on investments made into mutual funds by cutting costs that are not necessary. If you have been searching for how to invest in direct mutual funds, this guide has the details of everything you need to know.

What Are Direct Mutual Funds?

This is a scheme which an investor can directly approach the fund house to invest in, relieving him from the overhead costs of using a distributor or an agent. This results to lower expense ratios and higher revenues compared to regular mutual funds, which involve intermediaries who charge commissions.

Benefits of Investing in Direct Mutual Funds

Lower Expense Ratio – It means since no middlemen are in place, direct funds also stand to have lower fees, which in turn should yield higher returns over time.

Higher Returns – Just a little lower expense can yield lots of money in the long-term equation.

Transparency – Investors become privy to the information directly from the fund house and would find it easy to gauge performance.

More Control – Decisions are solely yours without interference or influence from agents or brokers.

Steps to Invest in Direct Mutual Funds

1. Make Your Investment Goals

Before you plan investing, it is important to have a clear understanding of what you want: wealth creation, tax savings, or retirement planning. Based on these, you would choose your mutual fund category.

2. Choose the Right Mutual Fund

Consider among other factors:

Risk appetite: Equity funds for high risk, debt funds for low risk.

Investment horizon: Shot-term as against very long term.

Fund performance: ceiling on historical returns and expense ratio, and also ratings.

3. Select a Fund House

Go to the official website of the mutual fund company, or use:

AMC (Asset Management Company) websites

SEBI-registered platforms like MF Central

Apps like Coin by Zerodha, Groww, or Kuvera

4. Complete Your KYC

Before you actually start investing, the first thing to do is to undergo the KYC process:

PAN Card, Aadhaar, Bank details and,

Complete by in-person or video verification.

5. Invest Online

Almost all fund houses have online platforms that allow you to:

Choose your fund

Select the mode of investment (lump sum or SIP)

Make the payment

Track and Manage Your Investments

Track your investments regularly with the help of:

Fund house portals

Portfolio tracking apps

Annual performance reviews

Direct vs. Regular Mutual Funds: Which is Better?

Strategies for Successful Mutual Fund Investing

Diversify Your Portfolio – Investing across different asset classes would help reduce the risk.

Go for SIPs – SIPs help in rupee cost averaging.

Remain invested for a long-term run – Mutual funds benefit only in long term possession.

Review Performance Should Be Periodical – Make sure that the funds you have match your goals with time.

Conclusion

The more you shall understand the ways to invest in direct mutual funds, the better skilled one can become toward self-control and maximization of returns in financial matters. When one chooses suitable funds with discipline, coupled with some monitoring, a strong financial future would be earned.

Are you planning to invest in direct mutual funds? Let us know what you think in the comments below!