How safe are Direct Mutual Fund platforms to invest in?

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Mutual funds are for sure one of the best investment options out there, and more and more people are investing in mutual funds. Investors usually tend to use apps like Groww or Upstoxx or their broker. But today we will talk about a lesser-known way of investing in a mutual fund a Direct Plan which we will discuss in this article-

What is a Mutual fund?
A mutual fund is one of the buzzing investment options. It can be understood as a fund, where money from different investors is pooled in together and then invested. There are 3 basic options of investment under mutual funds- equity, debt, and hybrid. Also, you have more options in these funds, you can invest based on sectors, the market capitalization of companies, etc. These options make the mutual fund a preferred option from customers, also there are other added advantages such as low risk, professional management, and good returns.

What is a direct investment in a mutual fund?
Direct investment is also known as a Direct plan, under this plan you directly invest in the fund, through their website. Normally, when you invest in a mutual fund, you do it through a regular plan, under which your money is usually invested through a distributor of the fund, such as your broker. A direct plan is similar to buying a product directly, from a manufacturer instead of a distributor. The fund, portfolio, fund manager, and rest of things are similar between both the plans.

Are Direct Mutual Funds safe?
Yes, Direct Mutual Funds are safe, as it’s the same fund just the investment procedure is different. Many companies offer investment in the Direct Mutual Fund. And almost all of these are registered with SEBI, thus they are regulated and governed by SEBI, making them safe. So, any risk of financial fraud is minimal and one doesn’t have to worry about it.

You always have open access to the funding house, you can always check your investment and see how the fund is performing, also if there is no lock-in period then you can withdraw your fund. So you don’t need to worry about the safety of these funds, but make sure you invest with complete research.

Conclusion – Direct Mutual Fund platforms are generally considered safe for investing as they are regulated by SEBI and follow strict rules and regulations to protect the interests of investors. However, it’s important to research the platform and the fund options before investing and to monitor your investments regularly. Diversifying your portfolio and investing for the long-term can also help reduce risk. It’s also a good idea to consult a financial advisor before investing in mutual funds to understand the risks and benefits involved. Overall, Direct Mutual Fund platforms can be a safe and effective way to invest, but it’s important to take necessary precautions and do your due diligence.

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