Compounding effect, it’s a simple maths formula that can take your money from pennies to millions over time. And the best way to squeeze all the juice from this miracle fruit is through mutual funds. When a lot of money is put in a basket and taken care of by a professional is called a mutual fund.
The finance professional does all the investing and gives you a return far greater than what indexes could provide, and in return, he gets the smallest percentage you won’t even notice. Mutual fund investing is considered one of the smartest forms of investment. But how do you invest? Is a Demat account required for mutual funds?
Before we dive into the article to understand whether a Demat account is mandatory if you want to invest in mutual funds, you can read our other articles to get an in-depth understanding of what mutual funds are and what is a Demat account.
What is a Demat Account?
A Demat Account is where you can safeguard electronic shares like money in banks. They are indispensable if you want to invest or even enter the market to learn all its secrets to make a fortune. Without a Demat account, you can’t invest in securities such as stocks and bonds. Back in the days, shares certificates would have sufficed, but in today’s day and age, an online Demat account is a must for investing.
Is Demat Account Required for Mutual Funds?
No! You don’t need to have an Online Demat account to invest in Mutual funds; as per se, Mutual funds, even though considered securities, are maintained by Mutual Fund companies and big banks. You only need to complete a KYC for the company whose mutual fund you want to invest in, and you will be able to invest through their portal.
Investing in a Mutual Fund Without a Demat Account
Investing in a mutual fund can be done in various ways, and the 3 most accessible ways to invest in a mutual fund without a Demat account are:
Mutual Fund Broker
You can find Mutual Fund brokers both online and offline easily. They are everywhere, and you must know a few yourself. Mutual fund brokers might be affiliated with an AMC or with a stockbroker, so they can invest your money into any mutual fund of your choice and even give advice on which one to invest in.
Asset Management Company
You can directly invest in the mutual fund of your choice from the company that created that mutual fund. They are called Asset Management Company (AMC) and offer customers mutual funds in many sectors. The only drawback is you can’t invest in mutual funds of other AMC.
Private Banks
Most Private Banks have mutual funds. Therefore, you can ask your bank for the service, which will help you invest in mutual funds. This is the easiest route as banks already have your details and KYC, so investing in mutual funds through a bank is only one net banking session away.
A Demat account is not required to invest in a mutual fund, but an online Demat account has many benefits. You can invest in stocks, bonds, ETFs and, of course, mutual funds. A Demat account helps you monitor and track your investment. They safely hold your shares and can transfer, sell and buy shares at your convenience.
Don’t know about get-rich-quick schemes; they don’t work most of the time. But this get-rich scheme will definitely work. However, it might take some time, but it will be worth it. Mutual funds have been around for centuries and have aced the test of time.