Mutual Funds Simplified: How To Invest In Direct Mutual Funds? How Is It Different From Regular MFs? Explained

Mutual Funds Simplified: Investors who are willing to invest in equities but are apprehensive due to their volatility and lack of knowledge often switch to mutual funds. MFs are relatively stable compared to stocks and offer better returns than traditional instruments like fixed deposits, post office saving schemes, etc.

There are two ways to invest in mutual funds (MFs), ie Direct MF Plan and Indirect MF Plans. The two options come with their own pros and cons. Here are all the details about mutual fund investment plans. We will also explain how people can invest in direct mutual funds.

What Is a Direct Mutual Fund?

Direct mutual fund is a preferable option for investors who prefer to park their mutual funds independently. As the name suggests, this scheme is a way to invest in mutual funds where investors will not pay anyone to help them, and will make the transaction directly with the mutual fund company. The scheme lets investors to save their extra fees and earn a little in the long run. This often results in lower costs, akin to buying goods directly from a manufacturer rather than through intermediaries.

Direct Mutual Funds: Pros And Cons

Investment in direct mutual fund plans is not as simple as people may think and requires a comprehensive understanding of mutual fund operations. It is also important for investors to be aware of the associated risk and potential returns with MF investment.
Investing directly means you are responsible for selecting the appropriate fund and managing your investment journey. This requires thorough research and informed decision-making. If you feel confident in your ability to handle these tasks independently, opting for a Direct Plan can lead to cost savings.

What is Regular MF Plan?

Entry of a distributor, agent or even an advisor in the MF investment process means that you are going for a regular MF plan, which is considered a good idea for beginner-level investors who do not have much knowledge related to equities, etc.
Investors who are unsure about market trends can refer to these plans to seek advice from a professional.

Regular MF Plans: Pros And Cons

The regular MF plans come with additional costs. But these advisors provide valuable insights and help tailor investment strategies to individual goals and risk tolerance.

How To Invest In Direct Mutual Funds?

-Select a mutual fund scheme of your choice. Do proper research about its returns, risks and other important aspects.

-Once after finalising the mutual fund scheme, investors have to visit the official website of the respective mutual fund house. According to the Association of Mutual Funds of India (AMFI), people can invest in a Direct Plan online through the websites of the respective mutual funds or via online platforms of stock exchanges platform or Mutual Funds Utility (MFU) or other various digital channels.

People can also use private platforms and online portals to purchase direct mutual fund scheme.

Can You Purchase a Direct Mutual Fund Via internet banking?

No, banks offer an option to invest in MF schemes on their internet banking portal. However, financial intermediaries, including banks, are mutual fund distributors; hence, they do not offer direct plans on their web portals.