Zerodha's Mf Investment: A Step-By-Step Guide

Investing in mutual funds has become increasingly popular in recent years, thanks to the convenience and accessibility they offer. With the rise of online investment platforms like Zerodha, buying and selling mutual funds has never been easier. Here's a step-by-step guide on how to invest in mutual funds using Zerodha:

Step 1: Open a Zerodha Account

To begin, visit the Zerodha website and click on the 'Open an account' button. You will be asked to provide basic information such as your name, email address, and phone number. After submitting these details, you will receive an email with instructions to complete the account opening process.

Step 2: Complete the KYC Process

Know Your Customer (KYC) is a mandatory requirement for all investors in India. Log in to your Zerodha account and follow the instructions to complete the KYC process by providing your PAN card, Aadhaar card, and address proof.

Step 3: Add Funds to Your Account

To buy mutual funds, you need to add funds to your Zerodha account. Log in and click on the 'Add Funds' button. You can use various payment methods such as net banking, UPI, or debit card to transfer money into your account.

Step 4: Choose the Mutual Fund

Log in to your Zerodha account and click on the 'Mutual Funds' tab. You will see a list of available mutual funds. Decide whether you want to invest a lump sum or through a Systematic Investment Plan (SIP), which allows you to invest at regular intervals.

Step 5: Place Your Order

After selecting the mutual fund, click on the 'Buy' button. Enter the investment amount and choose your payment method. Once you confirm the order, your mutual fund units will be credited to your demat account.

Remember to do your research and choose mutual funds that align with your investment goals and risk appetite. Happy investing!

How to open a Zerodha account

To open a Zerodha account, you can follow these steps:

• Visit the Zerodha website.
• Click on the "Sign Up Now" button.
• Enter your mobile number and click "Continue".
• Enter the 6-digit OTP received on your mobile number. Click "Confirm".
• Verify your email address by entering the 6-digit OTP received on your email.
• Enter your PAN number and date of birth. Click "Accept and Continue".
• Pay the account opening fees using UPI, Net Banking, or a debit or credit card.
• Sign in to your DigiLocker account to share your Aadhaar details with Zerodha.
• Allow Zerodha to access your Aadhaar details.
• Enter your bank account details and background information.
• Read all the instructions and tick all the checkboxes, then click "Continue".
• Write the displayed OTP on a piece of paper and hold it in front of a camera to complete the online In-Person Verification (IPV).
• Upload all the required documents, such as a copy of your PAN card, Aadhaar card, cancelled cheque, signature photo proof, and income proof (mandatory only for derivatives trading).
• Complete the e-sign with Aadhaar.
• Verify your email address by entering your security code.
• Review the account opening form and click "Sign Now".
• Enter your Aadhaar number and the OTP received on your registered mobile number.

With these steps, you can open an instant account with Zerodha and start trading today.

Completing the KYC process

• Log in to your Zerodha account.
• Navigate to the "Complete your KYC" section and click on the "Start KYC" button.
• Provide your PAN card details and upload a clear scanned copy or image of your PAN card.
• Provide your Aadhaar card details and upload a clear scanned copy or image of your Aadhaar card.
• Provide your address proof and upload a clear scanned copy or image of any accepted address proof document, such as a passport, driver's license, utility bill, or bank statement.
• Review the information you have provided and submit your KYC application.
• Your KYC application will be verified by Zerodha, and you will receive a notification once it is approved.

Please note that you must complete the KYC process before investing in mutual funds to comply with SEBI regulations. If you prefer, you can also complete the KYC process offline by submitting the necessary documents to a Zerodha branch office or authorized person.

Adding funds to your account

To add funds to your Zerodha account, log in to your account and click on the 'Add Funds' button. You can then choose to add funds using various payment methods, including net banking, UPI, or debit card. Once you have added funds to your account, you are ready to buy mutual funds.

It is important to note that to invest in mutual funds through Zerodha, you must have a Zerodha account. You can open a Zerodha account by visiting the Zerodha website and clicking on the 'Open an account' button. You will need to provide basic details such as your name, email address, and phone number. After filling in these details, you will receive an email with a link to complete the account opening process.

In addition to opening a Zerodha account, you will also need to complete the KYC (Know Your Customer) process, which is mandatory for all investors in India. You can complete the KYC process online by logging into your Zerodha account and providing some basic information, such as your PAN card, Aadhaar card, and address proof.

Choosing a mutual fund

There are a few factors to consider when choosing a mutual fund. You can start by honing in on funds that invest in the types of assets you are looking to gain exposure to. From there, take a look at the fees and overall costs. The higher the costs, the lower your returns will be. Compare the performance of the fund over the last three, five, and ten years. Though past performance does not ensure future performance, it can still be an indicator of the quality of the fund manager. Consistency is key. Additionally, check to see if that performance has outpaced the S&P 500. If it hasn't, then you're better off putting your money into an index fund tracking the S&P 500.

Decide Between Active and Passive Management

Do you want to beat the market or try to mimic it? It's a fairly easy choice: One approach costs more than the other, often without delivering better results.

Actively managed funds are managed by professionals who buy and sell investments for the fund. It has proved very difficult to outperform the market over the long term and on a regular basis. Professionals rarely achieve it, so why pay more for your fund to underperform?

Passive investing is a more hands-off approach. Index funds track an existing market index. Since these passive funds don't employ a fund manager, they're often cheaper, and they tend to perform better than actively managed funds.

Calculate Your Budget

Once you meet a mutual fund's minimum investment amount, you can often choose how much money you’d like to invest. Many mutual fund minimums range from $500 to $3,000, though some are in the $100 range. Some even have a $0 minimum.

Figure out how much money you have to comfortably invest and then choose an amount.

Figure Out Your Risk Tolerance

Generally speaking, the closer you are to retirement age, the more holdings in conservative investments you may want to have. Younger investors typically have more time to ride out the highs and the lows of the stock market. Over time, those peaks and valleys tend to look like a gentle upward slope.

Think About Your Asset Allocation

Your asset allocation is the composition of your portfolio. If you're just starting out, it may be a good idea to look into broad mutual funds that invest in different arenas of the stock market. One way to do this is by looking at a market index. The S&P 500, for instance, covers around 500 of the largest companies in the U.S. If you invest in a mutual fund (likely an index fund) that tracks the S&P 500, your investment performance should mirror that of the index.

But you don't have to just invest in funds that track the market. If you are already invested in some broad market index funds, you can explore mutual funds that focus on geography (think stock markets in Europe or Asia), different company sizes (small cap versus large cap), or specific sectors (funds that focus on oil, clean energy, or technology stocks).

Placing your order

To place your order, log in to your Zerodha account and click on the 'Mutual Funds' tab. You will be able to see a list of mutual funds that you can invest in. You can choose to invest in either a lump sum or a systematic investment plan (SIP). A SIP allows you to invest a fixed amount at regular intervals (such as monthly or quarterly).

Once you have chosen the mutual fund you want to invest in, click on the 'Buy' button. You will be prompted to enter the amount you want to invest and choose the payment method. Make sure you have added funds to your account before placing your order. You can add funds to your account by logging into your Zerodha account and clicking on the 'Add Funds' button. You can choose to add funds using various payment methods such as net banking, UPI, or debit card.

After confirming your order, your mutual fund units will be credited to your demat account. It is important to note that the Net Asset Value (NAV) price of mutual funds changes only once at the end of each trading day. Therefore, orders placed to buy or redeem a fund are typically executed based on the NAV price of the next trading day.

Frequently asked questions