{"id":2424,"date":"2019-03-13T11:38:43","date_gmt":"2019-03-13T07:38:43","guid":{"rendered":"http:\/\/gccexchange.com\/blog\/?p=2424"},"modified":"2019-03-12T15:40:25","modified_gmt":"2019-03-12T11:40:25","slug":"demat-account-or-asset-management-company-what-should-be-your-choice-when-buying-funds","status":"publish","type":"post","link":"https:\/\/gccexchange.com\/blog\/demat-account-or-asset-management-company-what-should-be-your-choice-when-buying-funds\/","title":{"rendered":"Demat Account or Asset Management Company: What Should be Your Choice When Buying Funds"},"content":{"rendered":"\n
\"Demat<\/figure>\n\n\n\n

The world of investment can be particularly\nconfusing for beginners. It is widely advised to the youngsters and the newly\nearning members of the society to start saving and investing as soon as\npossible. One of the most commonly used investment instrument employed by the\nIndian youth today is Mutual Funds or Systematic Investment Plans. Thousands of\nyoung earning members are investing their hard earned money in an investment in\nthe hope of getting attractive returns. This is for a good reason. Mutual funds\nhave proved to be one of the best tools to create wealth for those people who\nare looking for long term investment options. This makes it a favourable choice\nfor the youngsters as they have time on their hands. <\/p>\n\n\n\n

Getting\nStarted with Demat Accounts<\/strong><\/p>\n\n\n\n

When getting started with Mutual Fund investment, it is widely believed that it is best to open a Demat account<\/a><\/strong>. Demat accounts are easy to open and convenient to use. One can open a Demat account with any of the top banks in India or opt for a reputable broking company. In addition to this, having a Demat account also means that it becomes easier for the investor to buy other types of financial instruments while using a single account for monitoring and carrying out investment activities. <\/p>\n\n\n\n

In a generation where more number of people\nare technologically skilled, opening a Demat account seems to be a logical\noption as it allows one to invest in mutual funds over the internet. It is best\nto know all the other options that are available for mutual fund investments,\nbefore committing to a Demat account. <\/p>\n\n\n\n

Some of the common questions that have\noften bothered new investors include questions pertaining to the options he or\nshe has when investing if opening a Demat account is mandatory when investing\nin Mutual Funds? Is Demat account the best way forward for Mutual Funds\ninvestment? Which is the most convenient or cost-effective option and so on? <\/p>\n\n\n\n

Facts\nabout Mutual Funds Investment with Demat Account<\/strong><\/p>\n\n\n\n

First and the foremost thing is to know\nabout Mutual Funds investment and Demat accounts is that it is not mandatory\nfor an investor to open a Demat account when investing in Mutual Funds. It is\none of the many myths that go around due to a lack of awareness on the part of\nmany. <\/p>\n\n\n\n

Another common question is \u2018what is the\nbest option.\u2019 There is no right or wrong answer to this particular question.\nThe correct option varies from person to person. The correct option depends on\na variety of factors which includes things like the investor\u2019s requirement and\nhis or her understanding of the product that they are dealing in. <\/p>\n\n\n\n

One must know that Demat account is\ncompulsory when dealing in equity shares, however, with the advent of latest\ntechnologies stock exchanges have started to come up with separate platforms\nspecifically for Mutual Fund investments. Moreover, for the purpose of\nassociated benefits, the DPs have now started offering benefits like\ntransaction in Mutual Funds, apart from providing traditional services and\nproducts like bonds, NPS, corporate FDs, and so on.<\/p>\n\n\n\n

While there are many advantages of investing in Mutual Funds using a Demat account, there are also certain drawbacks that are associated. There is a widespread belief within the trading community that Demat accounts have the tendency to complicate estate planning. It is beneficial when there is a single legal heir<\/a><\/strong>; otherwise, it can be a long drawn out process in case of a demise. Apart from this other demerits of the Demat account includes the additional charges levied, lack of a direct option without a distributor and no advisory provided.<\/p>\n\n\n\n

Overall, if an investor is only interested\nin buying Mutual Funds, and is prepared to pay additional charges and\ncommission without detailed advisory, then Demat account is a good and\nconvenient option. However, if an investor is also interested in investing with\na carefully planned approach with professional advisory and calculated costs,\nthen it is better to look for other options.<\/p>\n\n\n\n

The\nRole of Asset Management Companies in Mutual Fund Investment<\/strong><\/p>\n\n\n\n

For those investors who are new in the\nmarket, or who do not have much knowledge or interest in it, then it is wise to\nget a financial expert to manage the money on his or her behalf. This is when\nutilising the expertise of Mutual Fund Houses, or Asset Management Companies\nplays an important role.<\/p>\n\n\n\n

AMCs collect money from a diverse group of\ninvestors and invests it on the investor\u2019s behalf. The investment decisions are\nbased on the investor\u2019s financial goal. Highly qualified fund managers make\nthese critical decisions after careful analysis of a host of different metrics\nlike industry risk, market risk and so on. <\/p>\n\n\n\n

When an investor invests with an Asset Management\nCompany, they actually purchase a portfolio from those offered by the company.\nThe process of investment of money involves several steps.<\/p>\n\n\n\n

The first step is asset allocation, which\nis followed by research and analysis. Upon successful completion of a thorough\nresearch and analysis process, the investor\u2019s portfolio is constructed\nprimarily based on the expertise and the experience of the manager who is\nhandling the investment. The last step of the process is the performance\nreview. Under this, regular updates are provided to the investor on the sales\nand repurchases, portfolio details, NAV, etc. This is a set process which makes\ninvestment more organised than the other options. At the same time investing\nwith an AMC also means forgoing control over the investment decisions and in\neffect, over the money of the investor. <\/p>\n\n\n\n

This is why when investing in Mutual Funds\nwith an Asset Management Company it becomes very important to choose the\ncompany very carefully. A variety of factors must be considered when picking\nthe Asset Management Company. The first thing that an investor must check the\nvalue. This is because if an investor is already earning less from a particular\nfund, then it makes no sense to buy the fund, irrespective of its\ncost-friendliness. <\/p>\n\n\n\n

Besides the values aspect, it is also\nessential to check for the reputation of the Asset Management Company. One can\nread reviews, monitor the past performance of the company for consistency, and\ntalk to the existing investors for satisfaction. One should also carefully\ncheck for the credential of the fund manager, as it is he or she who would be\nmaking all the critical decisions. Hence, a background check is necessary. <\/p>\n\n\n\n

Lastly, an investor should also find out if\nthe AMC charges through commission or fee. It is preferable for most investors\nif they charge a fixed fee instead of a commission.<\/p>\n\n\n\n

Looking at it from an objective point of\nview, AMCs have many pluses, at the same time, it also comes with less control.\nMoreover, AMCs are often considered as a less stable option as compared to the\nDemat account service providers like banks and stockbrokers. So it is best not\nto follow other\u2019s advice and make a choice based on individual requirement and\nunderstanding.<\/p>\n","protected":false},"excerpt":{"rendered":"

The world of investment can be particularly confusing for beginners. It is widely advised to the youngsters and the newly<\/p>\n","protected":false},"author":1,"featured_media":2425,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_hide_featured_image":false,"_jetpack_featured_image_duplicate_dismissed":0,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[16,978],"tags":[],"class_list":["post-2424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-money","category-trading"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t