Investing in mutual funds through demat account is growing rapidly but investors may face problems in doing any transaction in any other mode after that.
Investing in Mutual Funds: Mutual funds are a better investment option for investors who are nervous about market volatility. It can be started with just few clicks through demat account and due to this investment in mutual fund through demat account is growing rapidly but investors may face difficulties in doing any transaction in any other mode after that. If you invest through SIP (Systematic Investment Plan) in any mutual fund scheme through Demat account, then you may sometimes face special problems. For example, if you want to stop SIP through other means than through the Demat account, such as through the website, then you will not be able to.
On the other hand, if you want that whatever money you have invested in mutual funds from your demat account, you will not be able to go offline and get the statement from the office of AMC (Asset Management Company). Going there you will come to know that you will not be able to get the statement of any transaction of investment made through demat account offline.
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In other modes, therefore transactions may be required.
It is convenient for investors to buy and sell units of mutual funds through a demat account but sometimes it happens that you are not able to log in or choose the way you want to transact with the demat account. If the services are not there or the Demat Service Provider / Depository Participant (DP) has stopped the services, then there is a need to transact through other modes. However, it has to face many difficulties. Ajay Sharma, director of Investment Mantra, has given information about some problems.
Demat holders may face these problems
- For sale of mutual fund investments held in demat form, investors have to submit delivery slips to their DP (Depository Participant) which is usually cumbersome.
- The physical statement of the mutual fund units held in the demat account cannot be taken from the AMC or the registrar and they will get the same from the DP.
- If you have bought and sold investments in all mutual funds in physical form, then you can get the capital gains statements from the registrar. However, on the contrary, the accounts of the units held in demat have to be kept by the investors themselves.
- The broker has to pay brokerage charges on the purchase and sale of mutual funds in demat form and annual maintenance charge (AMC) in addition to transaction charges to the DP.
(Article: Amitava Chakrabarty)
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