With constant reforms carried out by the Reserve Bank of India (RBI) in order to encourage masses to invest in the growth of India one of its recent modifications is to enable investors transact their Mutual Funds (MFs) through Demat Accounts. It is now possible for mutual fund holders to hold their units in the demat form, in the same manner that they hold their shares. Holding your units in the demat form will help you acquire a consolidated statement for your holding across shares and mutual funds. You can purchase mutual funds through the Bombay Stock Exchange or the National Stock Exchange, by making registrations. Your existing stock broker can do so by filling the required details in a 2-page form, which has been mandated by a regulator. Once that has been completed, mutual fund units can be purchased from a broker, in the same manner by which you purchase your regular stocks and shares. Once purchased, you can hold them in your demat account in the same method by which you hold your shares.
Mutual funds can also be redeemed in the same process of selling stocks. You need to place an order through the stock exchange platform. You can then submit a delivery instruction slip to your depository slip or DP to transfer your mutual fund units. However, you must remember that buying mutual funds through a stock exchange comes with its own set of drawbacks. You will be required to pay an annual fee for the maintenance of your depository account. Also, your broker may charge you fees for the purchase of mutual funds, and in addition to this, you will be charged for your every transaction.
You can also convert your mutual funds held in the physical form into their demat form, by converting your statement of account into their dematerialized form. In order to convert your units, you need to acquire a Conversation Request Form or CRF from your DP. This has to be submitted to the DP with your statement of account. After conducting thorough verification, the DP will send the CRF along with your statement of account to an asset management company or a registrar and transfer agent. After conducting the required verification, the asset management company or registrar and transfer agent will confirm the request for conversion, which will be executed by the DP, and which will subsequently be credited to your demat account.
Investments form an important criterion for securing a safe financial future. With prudent decision making and the right balance between debt and equity you can manage to build a handsome corpus for you to enjoy as and when you require it. Like anything else, patience also plays a very critical role in deciding as to what extent your fund can see a growth. You can manage to get yourself a good vacation abroad without availing a personal loan or you can buy yourself the ride of your dreams without the need for a car loan only if you link your investments to your goals. Declines are meant to happen in any market cycle but the mantra is to just stay put. Investments in equities give you better returns if you have planned your investments for a long period of time. In such cases, the unevenness in the market rates are bound to straighten as time passes. Such fluctuations can adversely affect your financial decisions. Only if a fund underperforms consistently for more than two quarters in comparison to its benchmarks and to its competitors, it should be a matter of concern and you can choose to opt out of the fund after having considered the pros and cons with your financial advisor.