Buying A Mutual Fund? Read This First

buying mutual fund tips india nri

Planning to invest in mutual funds? You may be on the right path of growing your money efficiently, but there are some mutual fund details that you will need to know. Here are some essential mutual fund details that you should know before you begin your mutual fund investment. 

How Do Mutual Fund Schemes Work? 

Mutual funds are investment options that pool savings from different investors under a specific scheme that is managed by an asset management company (AMC). Pooled money is invested in securities like equity shares, bonds as per the investment objective of the scheme. The fund manager is appointed by the AMC and manages investment portfolios according to market movements to create wealth for the investors. An annual fee is charged by the fund house which is called expense ratio from the investors for managing their portfolios. Investors usually make money via regular dividends/interest and capital appreciation. They may decide to reinvest the capital gains via a growth option or get regular income via dividend option. 

Getting Your KYC Done For Mutual Fund Investment 

The requirement of KYC is to be in agreement with SEBI as per the Prevention of Money laundering Act, 2002 which can change from time to time. The KYC process is investor-friendly and is uniform across the different SEBI regulated intermediaries in the securities market like Collective Investment Schemes, Venture Capital Funds, Stock Brokers, Depository Participants, Portfolio Managers, Mutual Funds, ETFs, and others. Like this, one single KYC eliminates the duplication of the KYC process that can take place across these intermediaries and makes the process of investing in funds more safe and investor-friendly in 2023 and 2024. 

Documents Required To Be Submitted Along With KYC Application  

• Recent passport-sized photograph 

 Identity proof such as a copy of UID (Aadhaar) or PAN card or voter ID or passport or driving licence 

 Address proof like a driving license or passport or registered lease/sale agreement of residence or ration card or passbook or latest bank A/C statement or latest electricity or latest telephone bill (only landline) bill or latest gas bill, all of which are not older than 3 months. 

Copies of all these documents will have to be submitted by self-attesting them along with the originals for verification. In case originals of any of these documents are not produced for verification, the copies should be properly attested by entities authorised for attesting documents. If you are unable to furnish proper records, it could cause delays in getting a KYC. 

Resident Indians Can Get It Attested By: 

Gazetted officer, Notary public, Manager of a scheduled commercial or co-operative bank or multinational foreign banks. Ensure that the designation, seal, and name is affixed on the copy. 

NRIs Can Get It Attested From: 

Authorised officials of overseas branches of scheduled commercial banks registered in India, court magistrate, notary public, judge, Indian Embassy in the country where the client resides. 

Remember, mutual fund schemes are subject to market risks. Invest wisely, and while investing follow all the points that have been mentioned above.

I hope you enjoyed this blog post about what to know when buying a mutual fund.

Interested in more articles about what to know when buying a mutual fund for investing when living in or outside of India?

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