Mutual funds are among the most popular investment securities, especially among beginners and mid-level investors who find it difficult to pick the right stocks. If you are planning to start investing in mutual funds, there is a lot that you must know before that.
Although mutual funds are less risky and can give you consistent returns, the risk and return depends on the type of fund you choose. Moreover, there are various investment methods that an investor should understand. Before discussing how to invest in mutual funds online in 2025, let’s understand some basics:
What are Mutual Funds?
Mutual funds are investment programmes managed by professional fund managers. These funds pool money from multiple investors and invest it in various assets, including stocks, bonds, etc. The units in these funds represent the contribution of each investor.
These professional fund managers carefully choose the investment assets and manage the investments to maximize profits, minimize risks, and allow investors to diversify their investments without having to choose individual stocks or other assets.
Types of Mutual Funds
Before understanding how to invest in mutual funds online, you should understand all the types of mutual funds, so that you can choose the right ones. Mutual funds can be divided into various types based on different categories. The following are some significant types of mutual fund categories that every investor should know:
Types of Mutual Funds Based on Management Type
Based on the type of management, mutual funds can be divided into:
1. Actively Managed Mutual Funds: These mutual funds are dedicatedly managed by a fund manager who carefully analyzes and chooses investment assets to maximize profits. These mutual funds require thorough research, expertise, and continuous management.
2. mutualPassively Managed Mutual Funds: These mutual funds are not created from scratch by choosing individual asset classes, but they replicate a specific market index, such as the Sensex or the Nifty 50. These are also known as Index Funds. The passively managed mutual funds do not require extensive management and also have lower costs.
Also Read: How Stock Market Advisors Pick Multibagger Stocks
Types of Mutual Funds Based on Asset Class
Based on the asset classes, mutual funds can be divided into:
1. Equity Mutual Funds: These mutual funds majorly invest in the shares of companies and hence are suitable for investors who are looking for higher returns, but also have a high risk tolerance. The equity mutual funds can be further divided into small-cap, mid-cap, and large-cap funds based on the market capitalization of companies.
2. Debt Mutual Funds: Debt mutual funds majorly invest in assets, such as bonds, corporate debentures, and government securities, which are fixed income assets. These funds are more likely to generate a regular income through interest payments. Hence, these are suitable for investors with a low risk tolerance and those who want consistent income.
3. Hybrid Funds: Hybrid funds, as the name suggests, combine both equity and debt investment assets. These mutual funds are aimed at achieving the perfect balance between risk and return, making them suitable for investors who need high returns, but also have a low risk tolerance. Hybrid funds can be further divided into balanced hybrid funds, conservative hybrid funds, and aggressive hybrid funds.
Benefits of Investing in Mutual Funds
There are several advantages of investing in mutual funds, some of which are listed below:
1. Professional Management: Mutual funds are managed by professional fund managers having expertise in the stock market. They do proper research to choose the right investment assets and manage the funds with utmost care for maximizing profits and minimizing risk.
2. Reduced Risk: Mutual funds are diversified across different types of securities, including bonds, stocks, etc, making them less risky compared to individual stock investments. The risk is spread across multiple assets and hence the chance of losing all money is reduced.
3. Liquidity: These funds provide investors with a high flexibility to buy or sell funds at any time as they generally offer a high liquidity.
4. Affordability: Mutual funds are affordable to invest in. One can even start with a small amount and eventually increase their investment amount with time. This makes mutual funds an easily accessible investment method for everyone.
5. Tax Benefits: Not all, but some specific mutual funds also offer tax benefits, i.e. you can save taxes by investing in these funds.
6. Easy Access to Funds: There is no lock-in period associated with mutual fund investments. You can access your funds at any time when you need them.
Also Read: The Role of Stock Market Advisory in Long-Term Wealth Creation
The 2 Mutual Fund Investment Methods
There are two common methods to invest in mutual funds:
1. Lump Sum Amount: In this method, you invest a large lump sum amount at once. This method is suitable for investors who have a large sum of money to invest in and are looking for high returns in the long term.
2. SIP (Systematic Investment Plan): Under this method, you can choose to invest a small amount every month or every quarter. This allows investors to start with a small amount even if they do not have a large sum of money to invest.
Different Ways To Invest in Mutual Funds Online
Now that you know all the type of mutual funds and different investment methods, let’s discuss how to invest in mutual funds online in 2025:
1. Investing With The AMC
AMC stands for Asset Management Company. These are firms that manage particular investment assets as mutual funds. You can invest directly with an AMC through their online portal. You will have to submit some basic details and KYC documents in the beginning. If you want to invest in direct plans, this is a good option to consider.
2. Investing Through RIAs (Registered Investment Advisors)
Not all, but some SEBI registered investment advisors also provide the option to invest in mutual funds via their online portal. They allow investors to choose direct plans without AMC commissions, i.e. there are no unnecessary costs. Even if not for investments, you can choose to partner with a trusted mutual funds advisory services company like Sana Securities that can help you with portfolio management and decision making.
3. Investing Through Stockbrokers
This is a very common and popular way to invest in mutual funds online. You can choose to invest via a stockbroker that offers demat services. These stockbrokers are generally AMFI-registers and hence offer regular investment plans. The platforms provided by stockbrokers are generally easy to use for beginners.
4. Exploring Investment Options Provided by Banks
Many banks also provide the option to invest in mutual funds through their online portals or apps. Being the distributors of mutual funds, these banks offer regular plans. So, if you are not aware of any third-party brokers or other methods, you can explore the wealth management services of your preferred bank and see if they offer an online option to invest in mutual funds.
Things To Consider When Investing in Mutual Funds
Before you start investing in mutual funds, consider the following factors in order to make the right investment decisions:
1. Choose the Right Type: As discussed above, there are various types of mutual funds that you can choose from. There is always a mutual fund scheme that will perfectly align with your needs. Analyze your needs, risk tolerance, investment objectives, etc, to choose the right type. If you cannot decide, you can consider seeking professional help from a financial advisor for mutual funds.
2. Consider Your Goals: Keep in mind your goals before you start investing. Think about why you want to invest, how much return you are expecting, and by what time you are expecting that return. All these factors will help you decide on the right investment amount as per your goals.
3. Tax Saving is Good, but shouldn’t be the only purpose: There is only one mutual fund scheme, i.e. ELSS, which offers tax-saving. You can consider investing in this scheme, but make sure that tax saving is not your only purpose. There are several other schemes that can give you high returns over the long run, so choose mutual funds based on your objectives.
4. Choose SIP or Lump Sum: If you are a beginner, you should start with SIPs as they give you the flexibility to invest smaller amounts every month, quarter, or year. Lump sum investments are good for experienced investors with high risk tolerance. If you are still doubtful, you can opt for a SEBI-registered financial advisor who will help you choose the best mutual funds to invest in 2025 along with the right method.
5. Be Prepared for Market Volatility: Keep in mind that financial markets are subject to fluctuations. There can be ups and downs at times and your return depends on the market conditions. While the risk is lower with mutual funds, there is no guaranteed return.
Choose Sana Securities as Your Mutual Fund Advisor
Sana Securities, being a SEBI registered financial advisor, can help investors choose the right mutual fund schemes and the right investment methods. Whether you are a beginner looking for a professional help in mutual fund investments or an experienced investor who needs trusted portfolio management services, you can rely upon Sana Securities.
The CEO of Sana Securities – Rajat Sharma, has over 15 years of experience in the industry. You can book a consultation with Rajat Sharma, who is one of the most reputed financial advisors, and make the right mutual fund investment decisions. If you have any further query regarding how to invest in mutual funds online, get in touch with our experts now!
FAQs
1. How can I start investing in mutual funds online?
Ans. You can start investing in mutual funds online via a stockbroker’s platform, through a bank’s app/website, or directly with the AMC online portal.
2. What is the minimum amount required to invest in mutual funds online?
Ans. If you choose the SIP method, you can start investing in mutual funds with as low as Rs. 500.
3. What documents are required for mutual fund KYC online?
Ans. For mutual fund KYC verification, you will need an identity proof and an address proof. Moreover, your mobile number is verified through OTP verification method.
4. How to set up SIP in mutual funds through online platforms?
Ans. To set up mutual fund SIPs, you can choose the SIP amount, the frequency of investment, and set up auto-debit by linking your active bank account.
5. Can I invest in mutual funds through my bank’s app?
Ans. Yes, many bank apps provide the option to invest in mutual funds online. You can check if your bank offers the same.
About Author
