The news of Lockdown has started floating again. Many states have imposed partial lockdown, night curfew in the initial stage. The second wave may impact not only the lifestyle but also our business portfolios. So, it is right to get prepared for what is about to come again and do reduce the effect with proper care.
The market has shown a steep decline on 12 April 21. There was widespread loss news. Although it bounced back today this can be considered as a signal of similar upcoming days.
In such a volatile market, it is best to diversify your portfolio and make it more resilient to sudden jerks. For diversification mutual funds schemes such as SIP and STP are considered reliable. So let’s talk about different aspects of mutual funds and how to invest in Mutual Funds easily.
At the end of the blog, there is a tip to make more profit from existing or new mutual fund schemes. Keep reading till the end.
What are the ways to invest in Mutual Funds? Online and Offline?
Mutual Funds are considered the best investment tools for a diverse investment. To invest in a mutual fund in an offline mode, one can take the following options:
- An Asset Management Company (fund house) branch
- A bank
- A Karvy/CAMS office
- A mutual fund agent/distributor
To invest via digital mode, one can visit the website of a mutual fund distributor or any AMC(Asset Management Company). The following documents are required for KYC form in both online and offline mode:
- An identity proof (Aadhaar card, Passport, Voter ID, or Driving Licence)
- PAN card
- An address proof
- A passport-sized photograph
After all this, you can invest in any mutual fund scheme or make your own portfolio.
What should be taken care of for continuous investing during COVID-19?
All the methods have their own pros and cons while using one of them for investment. Let’s discuss them one by one and find a solution.
Problems with offline investment:
The Coronavirus pandemic has a widespread effect resulting in social distancing and lockdown. In such cases, those who rely on offline investment have to suffer! What is the solution?
It’s better to shift your trading slowly to online mode. Almost all major AMCs have provided secure online portals to their customers. Capital Tree can help you if you want to open a trading account or shift your investment via online mode.
This will give you an upper hand through quick and easy investment and real-time monitoring of your portfolio, trade book and statements, etc.
Problems with Online investment:
Online mode of investment overcomes the hurdles of offline mode but it has some limitations. If you are a new investor you can enjoy it without any issue but if you want to invest heavily then you have to consider a few aspects of online payment:
Different modes of payment have different upper limits. For example, UPI has a transaction limit of ₹10,000 up to ₹1,00,000 depending on different banks, IMPS has a ₹2,00,00 transfer limit to other bank accounts, and NEFT provides up to ₹25,00,000 per day limit per individual.
If there is a requirement, you can ask your bank to increase the transaction limit for your bank account.
If you have registered in an online AMC using one bank account and you want to invest using another bank account, you have to take care of fund transfer and their charges on your own.
Register in a trading mechanism with the active bank account and avoid unnecessary charges.
If you don’t have net banking enabled and you rely on UPI-based transactions, you might face issues with bulk transactions.
So, it’s better to enable the internet banking facility of your bank account.
How to make your Mutual Funds more profitable in a volatile market?
You have already known the importance of mutual funds and how to invest in them. Now you will read about the importance of Weekly SIP in a volatile market.
Just suppose you want to start a SIP of ₹1000 for a year.
Rs. 250 x 52 (52 weeks in a year) = Rs. 13,000
Rs. 1,000 x 12 (12 months in a year) = Rs. 12,000
There are two main observations:
- You get a chance to invest more money in a Weekly SIP with no extra burden.
- The number of corrections is higher(52 times) in a weekly SIP than in a monthly SIP(12 times). This means you can utilize most of the market falls by getting more stocks at lower prices.
In this way, you have a slight advantage over monthly SIP. The only necessary factor to make it a success is the necessary discipline for investment.
Capital Tree is an emerging brand in terms of all financial services. We help our clients with customized financial planning. We help them in setting up their investment journey in a fully digital manner. With us, you have the freedom to start investing and parking your funds in the financial instruments of your choice.