Is a Demat account required for mutual funds – Find out

Who doesn’t like choices? Having multiple choices allows you to pick the best option. It opens several doors and opportunities and lets you analyse the pros and cons of each alternative. Mutual fund schemes also offer several options. You can choose from different investment styles, types of funds, maturity periods, etc. You can also choose how you wish to invest in them – through a Demat account or without it. Let’s find out more about this. 

Is a Demat account required for mutual funds?

No, you do not necessarily need a Demat account to invest in mutual funds. Mutual fund schemes offer different types of investment methods, one of which is with a Demat account. A Demat account is short for a dematerialised account that holds all of your securities together in one place. This account converts your investments into an electronic format until you redeem them for cash. You can use a Demat account for various securities like stocks, debentures, as well as mutual funds. However, if you do not have one and do not wish to open one, you can still invest in a mutual fund scheme of your liking using other methods.

Process of buying mutual funds through a Demat account

Here are the steps to buy mutual fund schemes through a Demat account:

• Select a Depository Participant (DP). A DP acts like an agent between the depository and you.
• Submit the application form along with other important Know Your Customer (KYC) documents like PAN, Aadhaar, etc.
• Once the DP has verified your information, you will receive an account number and password that you can use to access your Demat Account.
• You can then start using your Demat account to invest in the mutual fund schemes of your choice.

Other ways of investing in mutual funds

Here are some other ways to invest in mutual funds:

Directly from the company

You can invest in a mutual fund scheme directly through the Asset Management Company (AMC). You can visit the AMC’s website and complete your KYC. Once your details have been verified, you will be given a folio number and password. You can then log into your account, select the funds that you like, and start investing.

Through a mutual fund distributor

You can also choose to invest through a mutual fund distributor registered with the Association of Mutual Funds in India (AMFI). They can be individuals as well entities such as banks, brokering houses, etc.

Conclusion

You can select any one of these options to invest in mutual funds. However, make sure to understand the costs involved in each. In addition to this, it is also important to pay attention to the long-term ease and convenience associated with the method.

An investor education initiative by Edelweiss Mutual Fund

All Mutual Fund Investors have to go through a onetime KYC process. Investor should deal only with Registered Mutual Fund (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit - https://www.edelweissmf.com/kyc-norms 

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