Investing in Mutual Funds via Demat Account

Now that you have successfully opened your demat account, it’s time to start investing in mutual funds. Here’s a step-by-step guide to getting started How To Open Demat Account:

1. Opening a Mutual Fund Folio and Linking to Demat Account

Once your demat account is active, you need to open a mutual fund folio. A folio acts as an investment account for your mutual fund investments. Contact your DP or mutual fund company to help you open a folio and link it to your demat account. This linkage enables you to purchase and hold mutual fund units in your demat account electronically.

2. Modes of Investing: Lump Sum or Systematic Investment Plan (SIP)

When it comes to investing in mutual funds, you have two options: lump-sum or Systematic Investment Plan (SIP). In the lump-sum mode, you invest a substantial amount in one go. On the other hand, SIP allows you to invest a fixed amount at regular intervals (monthly, quarterly, etc.). SIPs are ideal for long-term wealth creation as they average the purchase cost and help mitigate the impact of market volatility.

3. Redeeming Units and Tracking Investment Performance

As an investor, you have the flexibility to redeem your mutual fund units when the need arises. Simply place a redemption request with your DP or mutual fund company, specifying the quantity or value of units you want to redeem. The redemption proceeds will be directly credited to your bank account linked to the demat account.

It is crucial to keep a close eye on the performance of your mutual fund investments. Regularly monitor the NAV (Net Asset Value), fund manager track record, expense ratio, and any changes in the portfolio composition. Staying informed will help you make more strategic investment decisions and ensure that your investments are aligned with your financial goals.

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