Can I Invest in Mutual Funds through Demat Account?

Can I Invest in Mutual Funds through Demat Account?

Recently the reader asked me the above question. Well, The short and simple answer is “Yes”. You can invest in mutual funds directly through fund house as well as Demat account both.

You can buy Stocks, RBI Bonds, Mutual Funds and Gold ETFs via your Demat account. Than what is the difference between buying mutual funds directly from the fund house and from Demat account? Well the main difference is – Entry Load.

If you invest in Mutual funds directly means if you buy Mutual fund units directly from the fund house, the Entry Load will be 0%. But if you buy Mutual Funds through Demat account, the Entry Load will be 2.5%. This is the main difference.

I use ICICIDirect.com Demat account to buy shares & RBI Bonds. I also invest in mutual funds via this demat account. But they charge 2.5% as an Entry load from me. So Next time, I will buy Mutual Fund schemes directly through the fund house to avoid the Entry load of 2.5%.

The main advantage of buying Mutual funds through your Online Demat account is that, it’s paperless process. You can place your order within a split of seconds. You will just require a mouse click to place your order. No Documentations, no PAN Card required (Because you have already submitted the PAN card while opening a Demat account) and no Paperwork at all.

I buy Mutual funds through my Demat account only because of the above purpose. However, if you want to save the Entry load of 2.5% than you should not buy mutual funds from your Demat account. You should rather buy it directly from the fund house.