As time goes by, more and more people have started realising the benefits of investing in mutual funds. A mutual fund investment can help secure financial independence and also overcome inflation in the future. Now, before deciding to invest in mutual funds, it is not just important to understand the different ways in which one can invest in mutual funds but also how to redeem those investments. So, read the following article to learn how to buy as well as withdraw mutual funds.
How to invest in mutual funds?
- Through an online investment platform
A lot of people prefer using online investment platforms for investing in mutual funds. Such platforms help users invest, track, as well as manage all of their mutual fund investments with several AMCs. An individual would need to create their account to use such a platform, choose their preferred scheme, and decide whether they are looking to start a SIP (Systematic Investment Plan) or pay a lump sum when it comes to the type of payment. Next, they would need to fill up their personal and bank details, and finally, complete the investment by transferring the money online.
- Directly from the AMC (Asset Management Company)
One can invest in mutual funds directly by visiting the AMC website. Once they log on to this website, they will need to open a new account, provide all the required personal details for the investment they are making, provide their bank details, upload an image of a cancelled cheque, and complete the KYC verification process with their Aadhaar details. If the investor prefers the offline method, they can visit the AMC local office and submit an application along with their KYC documents and make the payment.
- Through a Demat account
Those who already have a Demat account do not need to create any other accounts for investing in mutual funds. Their existing Demat accounts can be used for their mutual fund investments and transactions. Using a Demat account for managing mutual funds is quite simple. All that one needs to do is log in to their account, look for the option to invest in mutual funds, choose their preferred fund, and invest by making the payment online.
- Through an agent
Those who are new to investing in mutual funds and want to rely on the expertise of a professional can always go to a mutual fund agent. These agents help their clients with investing in mutual funds based on their financial goals, risk appetite, and investment horizon. Do note that mutual fund agents charge a commission, which would be a certain percentage of the investment made.
How to withdraw mutual funds?
- Through a Demat account
If an investor has bought units using their Demat account, they will need to redeem their units using the same account. After their request to sell those units is processed, they will receive the amount through NEFT. This amount will get deposited in the bank account that is registered with the Demat account.
- Directly through the AMC
Those who choose this method will have to visit the online portal of the Asset Management Company to redeem their mutual funds. They will need to identify and choose the number of units that they wish to sell. If the investor prefers the offline process, they can visit the AMC office to redeem their mutual funds. Once the investor’s request is processed, they will then receive the amount either through NEFT or by cheque which is sent to their registered address. The online process of redeeming mutual funds is much faster compared to the offline process as the amount gets credited in just a day or two.
- Through an agent
Contact your financial advisor or mutual fund agent who is handling your mutual funds to sell units. Investors can also visit a mutual fund transfer agency and get a redemption form to initiate the process of selling units. Make sure to let the agent know what is to be done with the money that is credited. Based on the investor’s instructions, the agent will then either deposit money in the bank, give the investor a cheque, or invest that money in other mutual fund schemes.
Lastly, it is advisable to avoid selling mutual funds before their lock-in period is over. Doing so would be a wasted opportunity of making returns on the investment. This is because premature exits can involve exit loads instead of profits that could have been made had the investor stuck with their units till the end of their mutual fund’s lock-in period.