Can I invest in direct plan of mutual funds,in India, without visiting CAMS or Karvy? The answer is
- Yes, if you are an existing investor.
- No, if you are a new investor.
After the introduction of Direct Plans in Mutual Funds from 1st January, 2013, lots of investors are trying many options to convert their existing investments to Direct Plans. In fact, many new investors are keen to start investing in Direct Plans, but they are demotivated with the process involved in this.
What is the difficulty in buying Direct Plans?
In the case of Direct Plans, there is no Agent involved. So, you will not get the support of anybody to fill in the Application Form. We are all accustomed to sign on the bottomline, while the Agent does the Form filling job for us. In this case, you have to fill up the Form all by yourself. Moreover, you have to visit the offices of CAMS or Karvy as the case may be. All these are difficult and so, many investors are still not opting for the Direct Plan.
How to invest in a Direct Plan – Existing Investors
If you are already having some investment in a particular Fund House, then investing in Direct Plan is easy. You need not visit CAMS or Karvy for this. Suppose, you have invested in HDFC Top 200 Fund Regular Plan through any Agent/Broker/Funds India like portals. In this case, you will have a Folio Number with HDFC Mutual Fund. You can visit the website of HDFC Mutual Fund and look for the online investment option. There are many options listed for investors with or without PIN. You can invest in any Fund of HDFC Mutual Fund after creating a PIN for you. While most Fund Houses will allow you to create the PIN online, some Fund Houses will ask you to download the PIN application and send to them. You will get the PIN from them within a few days. After that, you can do almost all transactions like buying, selling, switching etc online. You can even start an SIP online. There is no need to fill up any Application Form. It is completely paperless.
Like this, you can invest in Direct Plan of Mutual Funds without visiting any offices of the Fund House or CAMS. But your existing investment will continue to be in the regular plan. You can switch the accumulated units after 1 year from the date of investment to the Direct Plan without any tax implication or exit load. The entire investments will reach the Direct Plan without visiting CAMS office.
You have to do this for each of your Folios to invest in Direct Plans of that Fund House.
How to invest in Direct Plan – New Investors
The first stage in Mutual Fund investing is to do the KYC (Know Your Client). You are expected to submit your Identity Proof and Address Proof as part of it. This can be done at any of the offices of the Fund House or offices of CAMS or Karvy. Is there any way to do this without visiting CAMS?
Yes, you can be a bit diplomatic. Just walk into your bank and meet the sales team there. There are people who are selling Mutual Funds. Just invest a token amount of Rs. 5,000 in each of the selected Fund under the regular plan. The bank staff will fill up the Application Form and do the KYC for you. Within a few days, you will get the Folio Number for each of your investments.
After getting the Folio Number, you can follow the steps mentioned above for the existing investors and do further investments in Direct Plans. After 1 year, you can switch the initial investment of Rs. 5,000 also into the Direct Plan.
Direct Plan investing is made easy – MF Utility
Wait for a few months. You will get another facility by AMFI to invest in Direct Plans using a single platform. This is called MF utility which is under the testing stage now.
How to select good Funds?
In the absence of an Agent, how will you identify better Funds in the market? If you cannot do the research and shortlist good Funds, go for a professional help. A fee only Financial Planner can help you in identifying better Funds for you. He will charge a fee but you will stand to gain a huge amount in the long-term compared to investing in Mutual Funds through Agents. If you invest Rs. 10,000 per month for 20 years, you can get around Rs. 99 Lakhs in Direct Plans assuming a 12% return. But if the investment is through an Agent, then you will get around Rs. 91 Lakhs only. In the long run, this can make a huge difference in your savings.
Now you know,how to invest in Direct Plan of Mutual Funds without visiting CAMS or Karvy? Please share it with your friends.