New Delhi: Direct investment in stocks is riskier as compared to investment in mutual funds (MF). Making an investment in mutual funds via a systematic investment plan (SIP) is among the preferred investment options. It is somewhat similar to a recurring deposit (RD), where the investor can invest a fixed sum of money regularly in an equity mutual fund scheme.
One can start with SIP with the amount as low as Rs 500 a month. SIP, also, allows the investors to invest in mutual funds through standing instructions to debit your bank account every month. Most of the fund houses allow investors to make investments monthly, bi-monthly and fortnightly, as per investor’s convenience.
However, in order to promote mutual funds, many fund companies have launched their mobile applications. Many investors carry the buying and selling of their funds through these apps. Through these apps, investors can buy, sell, switch mutual fund schemes, etc. But there are certain advantages and disadvantages of investing in MFs via mobile apps.
1. There is no requirement of documents to start with the process of investing in direct MF plans using mobile apps. It may be noted that once Know-Your-Customer (KYC) is done, then the investment can be made in a few minutes. In fact, investors can track the fund’s performance and manage their funds through apps easily. The process is paperless and saves a lot of time for the investors.
2. Mobile apps allow the investors to choose mutual fund schemes as per their own requirements, investment goals and risk appetite.
3. The disadvantage is that the investor will not be able to find the customised offerings. Most of the apps offer generalised investment services. Also, investors often find the schemes promoted by the owner of the app, making investors inclined towards those schemes.
4. Before making any investment, it is advisable to do a detailed analysis of the portfolio as mobile mutual fund apps lack quality research inputs. Most of the apps are not updated on a regular basis.
5. There are apps that do not provide risk ratio inputs for the investor’s analysis, while, some recommend funds on the basis of the last one-year performance only.