How to Invest in Mutual Funds Online without a Demat Account?

Yes, you read that right! You can invest in mutual funds (MF) through online and offline measures that do NOT include opening a Demat account.

68% of millennials (aged 25-34) in India are interested in investing in mutual funds (according to a 2023 survey by the Association of Mutual Funds in India i.e. AMFI). However, the same survey also revealed that 43% of this age group is confused about how to invest in mutual funds.

This also includes not being fully aware of the diverse avenues through which they can carry out these investments. If you are one of them and you’re wondering – How to invest in mutual funds online without a Demat account?”, you’ve come to the right place!

We’re here to reassure you that beginners who wish to avoid long-winded documentation and processes can begin their online mutual fund journey without a Demat account.

An important point to note here is that while investing in Mutual Funds doesn’t always require a Demat account, it does need for you to have a bank account.

Various ways to invest in mutual funds

( How to Invest in Mutual Funds with/without a Demat Account)

1. Do it with a Demat Account:

Usually, you require a Demat account for stock trading and not mutual funds. However, if you have one open already, you can choose to invest in mutual funds through a Demat account as well.

Essentially, investing through a Demat account is the way to go if you as a trader want to see all your investments – be it in stocks, mutual funds, bonds, or something else – in one place.

You can thus pay for, trade, withdraw, and oversee every investment through your one, single Demat account!

Opening an offline Demat account involves contacting a broker or visiting the AMC of the scheme in which you plan to invest (coming up soon below). Then, all you need to do is complete your KYC verification by providing proof of your identity and residence along with your bank details.

2. Activate it with AR Invest

Start your Mutual Funds journey in a simple and sahi way!

The AR Invest app by Anand Rathi allows you to invest in mutual funds and SIPs online, without requiring a Demat account. While TradeMobi – Anand Rathi’s stock trading app – needs a Demat account, there is no such requirement for Anand Rathi which allows you to invest in mutual funds with your regular bank account. Moreover, it lets you transact digitally at your convenience along with special features like an SIP calculator, real-time reports and analysis on your investment assets, as well as expert-curated baskets based on your MF investing goals.

It’s a simple process to begin investing on the app – download it, sign in, verify your account, and transact in the schemes you select. And that’s it – you’ve gotten a sahi start in your online mutual fund’s investing journey!

3Access it with AMC

A majority of Asset Management Companies (AMCs) or fund houses offer an online site/app through which you can invest in mutual funds.

You can create an account as an investor using an email ID phone number, or even a PAN card. After undergoing a KYC process which ten requires verification, you can invest in any of the mutual funds schemes that they have to offer.

With AMC-based MF investments, however, you run the risk of only investing in the mutual funds of one AMC (likely the ones they own, at that). There is thus a danger for beginners if they do not make the added efforts to diversify their portfolio by investing through multiple AMCs, which in itself is tedious and tough to track.

4. Order it Offline: // Oversee it Offline

You can initiate and access investments in mutual funds with AMCs through an offline procedure, as well.

For this, you may have to submit a mutual fund application form at the AMC branch of your choosing, with your self-attested identity and address proofs also requiring submission. Then commences the KYC verification process, for which you will need passport-size photographs and PAN card information.

Besides the hurdles mentioned above in the online AMC process, there is also a tracking issue for offline investments. Upon investing in an asset offline, you will be given a physical paper acknowledging your investment; and these papers might be hard to file and maintain.

5. Buy it with a Broker

If the AMC transaction process seems too demanding of your time and energy, you can always hire a broker who will transact on your behalf. Brokers can invest in mutual funds directly through AMC online or offline for you.

Indeed, they can also take over the opening of your Demat account, should you need one, and your KYC verification process. But their real value may often lie in the financial advice they offer you, about schemes and investments they would recommend for your wealth creation journey.

They will charge you a neat fee for their services, however, which might not include managerial and operational fees.

So, how to invest in mutual funds? You can do it with a Demat account or a regular one, through online or offline portals, by yourself or via a broker – but the bottom line is to do it.

And now that you know the “how”, let’s move on to “when” to invest in mutual funds – the answer is today itself!

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