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Demat Account required for Mutual Funds

Do You Need a Demat Account for Mutual Funds?

A demat account is used to hold securities in a digital format, including stocks, mutual funds, bonds, etc. It makes the process convenient, and the investor does not have to rely on physical certificates. This blog will help you understand the various ways you can invest in mutual funds and how you can use a demat account for investing in mutual funds. Let’s dive in:

Ways to invest in Mutual Funds

  • Asset management companies:

    AMCs allow investment in mutual funds from their official websites. One can open the respective website of the AMC and invest in the fund they want. Once you have completed the process online, you need to submit a copy of your PAN card, KYC details and a cheque. The process may differ from one AMC to another, so check the AMC’s website for all relevant information.
  • Online portals:

    You can also invest in mutual funds using online portals. The process is similar to investing with AMCs. Though here, the investor has the option to open an account and manage all the mutual funds. At the same time, going with trusted online portals is essential to avoid scams.
  • Offline distributors:

    Many offline mutual fund distributors offer a variety of funds to invest in. This includes holding a physical certificate, and the deal is considered valid through paper acknowledgements.
  • Demat account:

    A demat account allows you to have a faster, paperless experience where you can keep track of your investments. You can buy or redeem mutual funds with a few clicks. You need to select a broker or depository participant (DP) and complete the registration online. This includes the application form, uploading a PAN card and relevant KYC documents. Once registered, you will get an account number and password to access the demat account on your registered email address.

Now that we have seen the various options available to invest in mutual funds , let's look into why a demat account is preferred over other options.

Why should you use a demat account to invest in mutual funds?

  • Hold mutual funds digitally:

    Once you open a demat account, there is no need to maintain physical certificates for your mutual funds. This means you can purchase or redeem units of mutual funds with a few clicks. You can even invest in direct mutual funds from brokers such as m.Stock at 0% commission. All units of mutual funds are held in the registered demat account. Once the mutual fund units are redeemed, the amount is transferred from your demat account to the associated bank account.
  • Easy access to your investments:

    Once you have opened your demat account, you can access your investment anytime and anywhere. Moreover, it allows you to check the net asset value (NAV) of various mutual funds and help you make sound decisions while investing.
  • Safety and security:

    With a demat account, you have transparency to the transactions. Unlike offline options available, you can keep track of the value of the fund.
  • Add a nominee:

    While creating your demat account, you can add a nominee to your account, which allows the smoother transfer of your investments to the person in case of any unfortunate event.
  • Update details easily:

    No need to send lengthy applications to the fund houses; you can update your required information directly from the demat account.
  • Benefit for stock investors:

    A demat account not only eases the process of investing in mutual funds but also allows you to trade directly in stocks, too. Further, brokers such as m.Stock allow you to select from 5,000+ mutual funds from 40+ AMCs in India. You can choose to invest with a systematic investment plan (SIP) or lumpsum amount.

Opening a demat account to invest in mutual funds is a wise decision as it assures you transparency, security and allows you to manage your investments more efficiently. Visit the official website of m.Stock now to open a zero brokerage demat account.

Frequently Asked Questions

Opening a demat account to invest in mutual funds is recommended, although not mandatory. The benefit of investing in mutual funds through a demat account is that you can purchase or redeem your funds whenever you wish, and it is much easier to manage through a demat account.

You can invest in direct mutual funds by opening a demat account with m.Stock, where you get a variety of mutual funds to invest in, and you can select from over 5000+ mutual funds which match your investment goals.

Generally, demat accounts are considered safe as compared to the physical form of investments. Nevertheless, like any digital investment platform, demat accounts are vulnerable to phishing attacks, etc. Hence, always make sure you make a strong password and never share it with anyone.

It is not mandatory to have a demat account for mutual funds. But it makes mutual fund investments simple, safe and transparent.

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