A Beginner's Guide: Sbi Demat Mutual Fund Investments

Although a DEMAT account is not required to invest in mutual funds, there are several advantages to using one. A DEMAT account allows investors to buy mutual fund shares through the electronic transfer of funds without a broker. It also eliminates the need for physical fund certificates when redeeming shares. With a DEMAT account, investors can purchase, hold, and sell their mutual funds online through electronic bookkeeping. This method is safer and more efficient than the previous method of relying on physical certificates, which could be lost, stolen, or damaged. SBI offers a range of mutual fund schemes that can be accessed through their YONO app.

Advantages of a DEMAT account

Demat accounts have several advantages for investors. Here are some key benefits:

Safety and Security

The most significant advantage of a Demat account is the safety and security it provides for your financial assets. Before Demat accounts, physical share certificates were susceptible to loss or theft, and recovering these assets was a challenging and tedious process. Demat accounts eliminate these risks by storing securities in an electronic format, significantly reducing the chances of theft or loss.

Faster and Smoother Settlements

Dematerialisation has accelerated the settlement cycle from 14 days to just 2 working days. This reduction in settlement time saves investors time, effort, and energy, making the process more efficient.

Reduced Errors

The manual processes involved in physical and offline settlements often led to errors, known as "Vanda" or error trades. Demat accounts have significantly reduced these erroneous trades, streamlining the investment process.

Easy Transmission

In the unfortunate event of the account holder's death, Demat accounts facilitate a smooth transfer of assets to the next of kin. This can be achieved through a joint Demat account or by adding a nominee, simplifying the process compared to the challenges faced with physical shares.

Better Liquidity and Monetisation

Demat accounts make it easier to liquidate assets, allowing investors to sell or take loans against shares, mutual funds, and other financial assets. This level of flexibility is not available when assets are held in physical form.

Yields and Returns on Physical Assets

Demat accounts enable investors to hold physical assets, such as gold, in a dematerialised form. For example, the Indian government's Sovereign Gold Bonds provide investors with exposure to gold, along with an additional return of 2.5% annual interest, offering benefits not available when holding gold as a physical asset.

One-Stop Storage for All Assets

Demat accounts serve as a centralised repository for various financial assets, including shares, debentures, bonds, exchange-traded funds, and unit-linked insurance policies. This consolidation makes maintenance and tracking more accessible and convenient, especially when filing taxes.

Simplified Accounting and Management

When financial assets are held in Demat form, transactions are automatically accounted for by the depository participant, simplifying the reconciliation and management of accounts.

Central Point for Updating Information

With a Demat account, you can easily update important account information, such as a change of address or contact details, by informing your depository participant (broker). This streamlined process eliminates the need to contact multiple companies, as was previously required.

How to use the YONO SBI app to invest in mutual funds

Investing in mutual funds through the YONO SBI app is a simple process. Firstly, you need to download the YONO SBI app and log in. From there, you can navigate to the Investment section and select the option to invest in mutual funds.

The YONO SBI app offers a range of more than 40 SBI Mutual Fund Schemes to choose from. You can either invest instantly in a lump sum or opt for a Systematic Investment Plan (SIP). With SIP, you can start investing with as little as INR 500 anytime, anywhere. This allows you to make disciplined investments over time, which can be particularly useful for saving for future goals like your child's education or healthcare expenses.

The app also provides the flexibility to manage your investments. You can easily transfer funds between different schemes (STP), switch between funds, make additional investments in existing schemes, or withdraw your investments through a Systematic Withdrawal Plan (SWP). Tracking and monitoring your mutual fund portfolio is also made easier with the YONO SBI app, as you can access folio details, NAV value, investment category, scheme name, and current investment value at any time.

It's important to remember that mutual fund investments, regardless of the method used, are subject to market risks. Therefore, it is recommended to carefully read all scheme-related documents before making any investment decisions.

How to create a Zero Folio

To create a Zero Folio, you must open an SBI Demat account. Here is a step-by-step guide:

Step 1: Documents Required

To open an SBI Demat account, you will need the following documents:

• Identity proof (Aadhaar card/Driving license/Passport)
• Photocopy of Income Tax Return (ITR)
• Income proof (statement of your bank account)
• Bank account proof (Passbook photocopy/Cancelled cheque)
• Three passport-size photographs

Step 2: Eligibility

Any Indian resident, Non-Resident Indian (NRI), or Institution can open a Demat account with SBI. Even minors can open an account, with the legal guardian managing it until the child becomes an adult.

Step 3: Visit the SBI Website or Mobile App

Go to the SBI Smart website or use the YONO mobile application. Click on "Open an Account" and fill in your information. You will receive an OTP on your registered number to verify your details.

Step 4: Upload Documents

You can upload your KYC documents (Aadhaar card, PAN card, and address proof) online. Alternatively, you can also submit photocopies of the required documents.

Step 5: Wait for Verification

Your account will be enabled within 24-48 hours after verification. If you face any issues, a sales representative will contact you. You can also request assistance from a Relationship Manager.

Step 6: Access Your Demat Account

Once your account is activated, you can access it by visiting the SBI Smart website. Select “Login,” then click on “DP” from the drop-down menu. To view your Demat holdings, select the "Demat Holding" symbol from the "Menu" option.

Additional Tips:

• You can also open an SBI Trading Account to buy and sell shares. This is separate from the Demat account, which only holds your securities.
• SBI offers a 3-in-1 Account that combines a savings bank account, a Demat account, and an online trading account.
• You can freeze your Demat account if you don't plan on making any transactions for a while. This helps prevent fraud and illegal usage.

The best SBI mutual fund schemes

SBI Mutual Fund is one of India's largest and oldest mutual funds. It was established on 29 June 1987 and is a joint venture between the State Bank of India and Amundi, a French asset management company. SBI Mutual Fund offers 72 primary schemes, including 37 equity funds, 22 debt schemes, 11 hybrid schemes, and 2 other gold funds. Here are some of the best SBI mutual fund schemes:

SBI Contra Direct Plan Growth

This fund falls under the Equity category and has provided annualised returns of around 26.54% and 33.15% over the past 3 and 5 years, respectively. The minimum investment amount is ₹5,000 for a lumpsum and ₹500 for SIP.

SBI Long Term Equity Fund Direct Plan Growth

Also in the Equity category, this fund has generated annualised returns of approximately 26.11% and 27.85% in the last 3 and 5 years. The minimum investment amount is ₹500 for both lumpsum and SIP.

SBI Conservative Hybrid Fund Direct Growth

With annualised returns of about 10.58% and 12.21% over the past 3 and 5 years, this fund falls under the Hybrid category. The minimum investment amount is ₹5,000 for lumpsum and ₹500 for SIP.

SBI Magnum Gilt Fund Direct Growth

This fund, in the Debt category, has provided annualised returns of around 7.46% and 7.8% in the last 3 and 5 years. The minimum investment amount is ₹5,000 for lumpsum and ₹500 for SIP.

SBI Infrastructure Fund Direct Growth

This Equity fund has delivered impressive annualised returns of about 28.87% and 29.38% over the past 3 and 5 years. The minimum investment amount is ₹5,000 for lumpsum and ₹500 for SIP.

SBI Consumption Opportunities Fund Direct Growth

Another fund in the Equity category, it has achieved annualised returns of around 26.79% and 26.65% in the last 3 and 5 years. The minimum investment amount is ₹5,000 for lumpsum and ₹500 for SIP.

SBI Healthcare Opportunities Fund Direct Plan Growth

This Equity fund has offered annualised returns of approximately 23.03% and 32.88% over the past 3 and 5 years. The minimum investment amount is ₹5,000 for lumpsum and ₹500 for SIP.

SBI Multi Asset Allocation Fund Direct Growth

With annualised returns of around 15.62% and 16.22% in the last 3 and 5 years, this Hybrid fund has a minimum investment amount of ₹5,000 for lumpsum and ₹500 for SIP.

SBI Banking & Financial Services Fund Direct Growth

This Equity fund has returned approximately 14.88% and 17.57% in annualised returns over the past 3 and 5 years. The minimum investment amount is ₹5,000 for lumpsum and ₹500 for SIP.

These are some of the top-performing SBI mutual fund schemes, offering a range of investment options across different categories.

How to buy mutual funds without a DEMAT account

You do not need a Demat account to invest in mutual funds. Here are some alternative ways to invest:

Broker on the Stock Exchange

This is the Demat way. For people who invest in stocks, mutual funds, bonds, and other similar instruments, it is convenient to be able to see all of their investments in one place. Depending on the type of Demat account you have, you may be charged an annual fee, a transaction fee, or both.

By AMC

You can invest in a mutual fund by visiting the AMC website directly. However, you can only invest in mutual funds from one AMC this way. Investing in mutual funds from only one AMC is also a bad strategy because it prevents diversification. AMCs will try to promote their own mutual funds instead of recommending mutual funds from other AMCs that might be necessary to shield you from risk.

Offline Distributors

There are various online and offline distributors through whom you can invest in a host of mutual funds. In the case of offline distributors, upon investing, you will be given a physical paper acknowledgment of your investment.

Online Distributors

Online distributors usually offer a completely paperless experience with complete tracking and the other related controls. You can also track all your investments in one place, so it's easier to decide when to redeem. All of these services are free of cost to the investor.

Through a Bank

Many private banks offer their account holders the option of investing in mutual funds through their online banking services. Your net banking will show the financing you've done through a bank.

Frequently asked questions