Mutual funds have become a popular investment choice in India due to their diversification, professional management, and ease of investment. A demat account is usually associated with stocks and securities, but did you know that you can also use a zero demat brokerage account to invest in mutual funds? In this guide, you will learn what a Zero brokerage demat account is, how it works, its benefits, and how you can use it to invest in mutual funds seamlessly.
Understanding Zero Demat Mutual Fund Brokerage Account
The Zero brokerage demat account is an electronic account that enables investors to store and manage mutual fund shares digitally. Instead of receiving physical certificates of mutual fund shares, the shares are credited to the investor’s demat account. This electronic format makes it easier to track and manage mutual fund investments. Check more on TradingView.
Zero brokerage demat account is a special type of demat account that offers the advantage of investing in mutual funds without incurring brokerage fees. While mutual funds themselves have expense ratios, zero brokerage means that you will not be charged any additional costs for buying, selling or holding mutual fund shares through your demat account.
How Does a Zero brokerage demat account with a mutual fund Work?
Opening an Account: Start by opening a zero demat brokerage account with a brokerage firm that offers this service. When opening an account, identification documents, proof of address, and bank details are usually presented. Check for more on TradingView.
Verification: The brokerage firm reviews your documents to ensure they meet legal requirements. This is a standard process to ensure the security and authenticity of your accounts. Check more on TradingView.
Deposit into your account: Once your demat account is active, you can transfer money from your linked bank account to your Zero brokerage demat account. These funds are invested in investment funds.
Invest in Mutual Funds: Use your demat account’s online platform or mobile app to browse and select the mutual funds you want to invest in. You can place purchase orders for mutual fund units through the Zero brokerage demat account, just as you would with traditional mutual fund investments.
Redemption and Dividends: When you redeem mutual fund units or receive dividends, the proceeds will be credited to your Demat account, providing a consolidated view of your investments. Check more on TradingView.
Management and Tracking: The Zero brokerage demat account allows you to track the performance of your mutual fund investments, view transaction history, and receive statements electronically.
Benefits of Zero brokerage demat account for Mutual Funds
Cost savings: The biggest advantage is the elimination of broker commissions. Investing in traditional mutual funds may be subject to entry or exit charges, which may affect returns. With zero brokerage, these fees are eliminated, so you benefit from the full return of the investment fund. Check more on TradingView.
Consolidated Portfolio: With a Zero brokerage demat account, you can hold mutual funds and other financial stocks, giving you a consolidated view of your investments in one place. This simplifies portfolio management.
Ease and Convenience: Investing in mutual funds through a demat account is convenient, especially if you already have a demat account for other securities. You can manage your investments through a single platform. Check more on TradingView.
