Mutual funds provide an excellent avenue for investors to achieve diversified portfolios, additional liquidity, tax benefits and much more—the following brief aims to provide an overview of how one can invest in mutual funds using trading apps.
A mutual fund pools money from various investors to purchase shares, bonds, securities and other assets. Mutual funds are essentially more beneficial for designing diverse portfolios than what an investor could own. These provide an excellent avenue for investors involved in stock or option trading and seeking to benefit from another well-diversified portfolio. You can seek to increase the value of your investment in a mutual fund through the following ways:
- Dividend Payments – As a fund receives dividend payments, these are passed on to investors proportionately to their investment.
- Net Asset Value – The Net Asset Value (NAV) can be defined as the price per mutual fund share. NAV increases with the increase in the value of the fund.
- Capital Gains – Suppose the value of constituent security has increased in price, and the mutual fund decides to sell it. In the process, the fund incurs a capital gain. Most mutual funds distribute capital gains annually.
Trading Apps for Mutual Funds
Technological advancements have made it easier to invest in mutual funds. Numerous apps facilitate an easy trading platform in equities, derivatives such as futures or options trading, mutual funds, and other asset classes. Bajaj Securities App uses an advanced technological interface that helps users invest in mutual funds in a simple and hassle-free manner. Moreover, the Bajaj Securities app provides extensive features for mutual funds, such as:
- Minimum investment of Rs. 100
- 1600 plus fund portfolio
- Pay 0% commission on direct plans
- 40 plus asset management companies
- Multiple investment options such as debt, equity, and more
- Investment tracking facility
- Ability to retrieve historical data
- Lumpsum or SIP payment options using UPI/debit card/net banking etc.
Investing in mutual funds through trading apps
Trading apps help investors invest in mutual funds hassle-free. Users can choose to invest in stocks, seek to profit from options trading or invest in other derivative contracts or asset classes simply through a couple of clicks. Let us understand the procedure involved by which users can invest in mutual funds through trading apps.
Step 1: Select your preferred app: download and signup.
Step 2: Choose your preferred scheme from the list of available plans being offered. You must conduct thorough research before you select a specific fund. You may want to thoroughly conduct a detailed analysis of the specific portfolio before making an investment.
Step 3: Select your mode of investment. You may select a one-time investment or a SIP. Most apps offer SIP features wherein investors can invest some amount into the fund regularly, such as monthly, bi-monthly, fortnightly or quarterly.
Step 4: Enter the investment amount or the SIP date.
A significant advantage of trading apps is that they do not require any additional documents for investing in mutual funds through trading apps. Once the Know-Your-Customer (KYC) is done, investors can begin using the apps.
Additionally, you must consider the following factors before investing.
- Active vs passive – Actively managed funds are handled by professionals who try to beat the market, while passive investing mimics the market. Before investing in a fund, understand which types of funds you want to invest in.
- Calculate your budget – Calculate the amount you want to invest in the fund. Understand your future cashflows to analyse what would suit you better – a one-time investment or a SIP.
- Understand Mutual Fund Fees – You will be charged an annual fee for the maintenance of the mutual funds. These charges are also termed the expense ratio. A firm with a 1% expense ratio will cost you Rs. 10 for every Rs. 1000 you invest. Understand the fees and the related terms and conditions.
Advantages of using trading apps
Here is an overview of the key benefits of using trading apps to invest in mutual funds.
- Flexibility – A few simple clicks enable users to buy/sell or switch between different mutual fund schemes.
- Easy Tracking – Users can easily track the performance of their respective funds.
- Ease of selection – Most apps allow investors to choose from various mutual fund schemes based on their requirements, risk-appetite or investment goals.
- No Geographical constraints – Users can make investments or modify their holdings anywhere.
- Quick turnaround time – Trading apps take significantly less time to complete the assigned transactions.
Trading apps offer numerous features for trading in mutual funds in a simple and hassle-free manner. These apps have made it convenient for investors to choose from different investment schemes and buy/sell their holdings anywhere and anytime.