Invest in Mutual Fund is a good way to earn high returns with minimal effort. However, paying brokerage fees on every transaction can significantly reduce your earnings. This is where zero brokerage mutual funds come in. In this guide, we will walk you through everything you need to know about zero brokerage mutual funds, how to select the right fund, and a step-by-step guide to investing in them.
Understanding Zero Brokerage Mutual Funds: What Are They?
zero brokerage demat account are similar to regular mutual funds with the only difference being that the investors do not have to pay any brokerage fees. Traditional mutual funds would charge fees for managing investments and rendering advisory services. However, with the arrival of zero brokerage mutual funds, both beginners and professional investors can access the investment option without paying any additional brokerage fee.
Different Types of Zero Brokerage Mutual Funds and Their Advantages
Two types of zero brokerage funds are – Direct plan and Regular plan. The Direct plan of a fund is one which is meant for investors who can research on their own and require no further guidance from financial planners or brokerage houses. Direct plans have lower expense ratios as compared to Regular plans, as they entail no distribution expenses, thus maximizing the investor gains. The Regular plan, on the other hand, is meant for those investors who prefer the guidance and research provided by financial advisors and brokerage houses.
Section 3. How to Choose the Right Zero Brokerage Mutual Fund for You?
The right zero brokerage mutual fund can help an investor maximize returns while balancing risk. Discussed below are the factors to consider before selecting a zero brokerage mutual fund.
Types of funds
Indian markets provide several options for mutual fund investments. Understanding the different types of mutual funds and their benefits is essential to making the right choice.
The investment goals of an investor will place an important role in their choice of zero brokerage mutual funds. Goals may range between short-term or long-term investment, capital preservation or growth, inflation protection, regular cash flow requirements, and saving for tax purposes.
Investing in an old and established mutual fund is comparatively much safer than investing in a new fund as the history of the fund can provide an idea of its consistency and performance.
How to Choose the Right Zero Brokerage Mutual Fund for You?
– No Hidden Expense Ratio, as in the case of the direct scheme
– Better Returns, as compared to Regular Mutual Funds
– Provides direct ownership and transparency in holding one’s funds
Step-by-Step Guide to Investing in Zero Brokerage Mutual Funds.
Step 1- Decide on the goal and time horizon for your investment
Step 2- Choose the zero brokerage mutual fund that best aligns with your goals and expectations
Step 3- Go through the Scheme Information Document and read all the details pertaining to the fund
Step 4- Register with the AMC or RTA of the selected fund
Step 5- Submit all the required documents for KYC compliance
Step 6- Choose the investment mode- direct or intermediary
Step 7- Initiate the iWish account With HDFC bank and choose the designated bank account for the investment.
Step 8- Choose the investment amount to be deducted through an electronic auto-debit and transfer setup
Step 9- Track your investment and add funds on regular intervals for gaining better returns.
Step 10: Redeem the fund when needed, with no additional fee for liquidating money.
Investing in Zero Brokerage Mutual Funds: Step-by-Step Guide.
Earning money is the ultimate goal of investments. Zero brokerage mutual fund schemes maximize an investor’s overall gain by eliminating the service charges that an intermediary brokerage imposes. Investors can now bypass this expense while availing of financial services. The Zero brokerage mutual funds allow direct ownership of funds and offer maximum transparency and returns at minimal expense. With that said, zero brokerage mutual funds are best suited for disciplined, informed, and long-term investors in search of better returns and transparency.