Fixed Maturity Plans

 

WHAT ARE FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLAN (FMP) is a closed-ended debt product with a pre-defined tenure that invests all its assets primarily in fixed income instruments like certificates of deposits or bonds that lock-in yields at the current level.

This tenure can range between 30 days to as long as five years. The most commonly available tenures range from

• 30 days
• 180 days
• 370 days
• 395 days and so on

A FIXED MATURITY PLAN (FMP) portfolio consists of varieties of fixed-income instruments with matching maturities. Based on the tenure of the FMP, a fund manager makes investments in such a way that all of them are matured around the same time.

Throughout the tenure, all the units of the plan are held collectively until they mature on a specified date. Thus, the amount invested gets locked in for the specified period and investors get an indicative rate of return of the plan.

Unlike fixed deposits, FIXED MATURITY PLAN (FMP)s do not guarantee returns as they are linked to the performance of the instrument they have invested in. Also, it involves a higher risk of default on interest as well as principal repayment as compared to fixed deposits.

The basic objective of FIXED MATURITY PLAN (FMP) is to generate steady returns over a fixed tenure, thus shielding investors from interest rate fluctuations.

FIXED MATURITY PLANS (FMP)s primarily invests all its assets in debt securities like

• Certificate of deposits (CDs)
• Commercial papers (CPs) whose maturity or tenure matches that of the scheme.
• Bonds of small and large corporate etc.

These securities are redeemed at the end of the FMP term.

For example, if the FMP is for 12 months, the fund manager will invest in instruments with a maturity of 12 months only. Since FMPs are closed-ended and investors cannot redeem units with the mutual fund during the FMP tenure, the fund manager need not sell any part of the portfolio during this tenure thus locking the yield of the portfolio. This also mitigates the risk of loss on the premature sale of securities and lowers the interest rate risk.

FIXED MATURITY PLAN (FMP)s, however, are not allowed to disclose 'indicative yields' to investors like in the case of fixed deposits, where interest rates are pre-defined.

 

 

HOW ARE FIXED MATURITY PLANS (FMP) DIFFERENT FROM THE FIXED DEPOSIT?

Being a fixed income debt instrument, FMPs and fixed deposits have a lot of similarities. Both are debt instruments and require you to stay invested for a fixed duration. Both of them are available in varying maturities to suit your convenience.

However, FMPs differ from FDs in the following aspects –

1. Risk – FIXED MATURITY PLANS (FMP) are more vulnerable to credit risk and interest rate risk which means if the company in which the scheme has invested starts defaulting in making payments, the investments of all the investors will be held leading to interest loss and in worst cases, complete loss of principal component as well.

 

2. Returns – Interest earned from fixed deposit is fixed and guaranteed however, FIXED MATURITY PLANS (FMP) offers indicative yield which may change subject to market conditions. FMPs offer comparatively better post-tax returns as compared to bank FDs.

 

3. Liquidity – Though investors are expected to stay invested in both the instruments until it matures, FDs are more liquid. In case of emergencies, investors can withdraw their money from FDs after paying the penalty however, money invested in Fixed Maturity Plans (FMP) gets locked until maturity. To liquidate FMP, an investor will have to look for a buyer in the secondary market.

 

4. Taxation – Interest earned out of bank fixed deposits are added to the total taxable income and taxed according to the applicable slab. Whereas income earned out of is considered as “Income from Capital Gains” and if held for more than 36 months will be taxed at the rate of 20% with indexation benefit.

 

 

IMPORTANT POINTS TO NOTE ABOUT FIXED MATURITY PLANS (FMP)

The following are some of the important features of the FIXED MATURITY PLANS (FMP) that every investor must know.

1. Investor’s profile – FIXED MATURITY PLANS (FMP) being a debt product is best suited to young investors who want to earn predictable returns however can digest the risk of default of interest as well as the principal repayment and market volatility.

 

2. Risk – Though FIXED MATURITY PLANS (FMP) is a debt instrument, it is comparatively riskier than debt funds due to the inclusion of lock-in, as the fund manager cannot take a call to withdraw money before maturity in case something goes wrong with the company. These plans are considered to be the moderate risk-moderate returns investment. It is comparatively safer than equities since money is lent to companies in the form of loans. In case, they have purchased bonds of companies with poor credit rating, they earn higher returns however, they are riskier as compared to AAA-rated companies.

 

3. Liquidity – FIXED MATURITY PLANS (FMP) provide minimum liquidity as it involves a lock-in until maturity. However, these plans are listed on stock exchange hence, in case of emergencies it can be sold in the secondary market provided the investor can find a buyer.

 

4. Taxation – Income from FIXED MATURITY PLANS (FMP) comes under debt taxation and is considered as “Income from capital gains” and qualifies for indexation benefits if held for more than 36 months. However, it does not provide tax benefits.

 

5. Volatility – Returns from FIXED MATURITY PLANS (FMP) are market-linked which makes them highly volatile. However, being a debt instrument, its volatility is limited provided the assets are invested in AAA-rated company. Also, the returns it offers are pre-determined and indicative.

 

6. Time horizon – FIXED MATURITY PLANS (FMP) are available with different maturities and are suitable for investors having a time horizon of 1 to 3 years or maximum up to 5 years. Beyond that point is a good duration to invest in balanced funds or equity funds.

 

7. Regular Income – FIXED MATURITY PLANS (FMP) does not provide any regular income as the interest earned gets accrued and paid with the principal on maturity.

 

8. Returns – Since it is a market-linked product, its returns are not fixed. However, one can expect the average returns in the range of 7% to 13% depending on the quality of bonds and duration of funds. It should be noted that returns from FMP is not guaranteed and may differ from what was initially offered.

 

9. Asset class – FMPs are considered as debt instruments.

 

10. Cost – Fund houses charge expense ratio to facilitate mutual fund investments.

 

11. Loan facility – In case of emergencies, investors can pledge their mutual funds units as collateral to avail loan facility.

 

 

WHO CAN INVEST IN FIXED MATURITY PLANS (FMP)?

Any individual including NRI (having NRE and NRO account), firms, Trusts, Association of Persons, Hindu Undivided Family, companies can invest.

 

 

WHERE DOES FIXED MATURITY PLANS (FMP) INVEST YOUR MONEY?

FIXED MATURITY PLANS (FMP) primarily invest all their assets in debt instruments like a certificate of deposits (CDs), money market instruments, corporate bonds, commercial papers (CPs) and fixed deposits.

Based on the duration of the scheme, the fund manager allocates your money in instruments of similar maturity. For example, if FMP is for 5 years, then the fund manager will invest in corporate bonds having a maturity of 5 years.

Unlike other debt funds, the fund manager of FMP follows a buy and hold strategy. There is no frequent buying and selling of debt securities like other debt funds. This helps them keep the expense ratio of FMPs at a lower level as compared to other debt investments.

Assuming, you invest Rs. 10,000/- per month until retirement (60 years) @ average rate of 9% per annum, the corpus you will create (approximately) on your retirement i.e. at the age of 60 at various age groups will be as follows:

 

WHAT KIND OF RETURNS CAN FIXED MATURITY PLANS (FMP) GENERATE?

Returns generated by pure debt fixed maturity plans

 

 

FUND ACCESSIBILITY AND LOCK-IN APPLICABLE FOR FIXED MATURITY PLANS (FMP)

FIXED MATURITY PLANS (FMP) are highly illiquid. Money invested in FMPs are locked in until maturity. In a way, it is good for some investors as fund managers can take calls accordingly to generate better returns. Also, it instills discipline in investment.

However, in cases where investors want to liquidate their investment due to an emergency, they may not be able to do so before maturity. Even if they offer to sell in the secondary market, there are very limited buyers for such instruments.

Hence, one should analyze their liquidity needs and accordingly invest in FMPs.

 

 

WHAT ARE THE BENEFITS OF INVESTING IN FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLANS (FMP) offer the following benefits to its investors.

U1. Better returns than fixed deposits – Fixed maturity plans (FMP) offer better post-tax returns than fixed deposits because it is market-linked and attracts debt taxation with indexation benefits. Indexation helps lower capital gains and thus lower tax liability.

 

2. Low risk compared to equities – Since they invest in debt instruments, FMPs offers higher protection of capital as compared to equity funds.

 

3. Low Volatility – As the securities are held until maturity, FMPs are least affected by interest rate volatility than other debt instruments.

 

4. Lower Expense Ratio – Since these instruments are held until maturity, there is limited buying and selling of instruments which makes it more cost effective and results in lower expense ratios for investors.

 

5. SEBI Regulated – Fixed maturity plans (FMP) is a variant of mutual funds which are regulated by SEBI as their governing body. They restrict fund houses with their strict rules and regulations to keep their code of conduct and ethics in place and often protect investor's interests.

 

6. Risk Mitigation – By investing even a nominal amount in mutual funds, you can get exposure to several companies. So, if you have Rs 10,000/- in FMP, you will be able to take exposure to various large-cap companies and lower risk of concentration.

 

7. Predictable Returns – Since FIXED MATURITY PLANS (FMP) invest primarily in fixed income instruments, its returns are somewhat indicative and predetermined.

 

8. Expert Advice – One of the major benefits of investing in mutual funds is that you don’t need to worry about choosing the quality stocks to invest in. Successful investing requires a lot of research and knowledge. You need to dig deep into the financials of a company before you invest in it. Here, the fund manager does the job for you who is well qualified, understands the market dynamics and has competency in taking strategic investment decisions.

 

 

WHAT ARE THE LIMITATIONS OF INVESTING IN FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLANS (FMP) has the following limitations.

1. Risky – Since FIXED MATURITY PLANS (FMP) are market-linked, they are exposed to market fluctuations thus, making it riskier in terms of the interest payment as well as protection of principal component as compared to fixed deposits.

 

2. No guaranteed returns – Unlike FDs, fixed maturity plans (FMP) do not guarantee returns. Though the returns it offers are predictive, they are linked to market sentiments.

 

3. Opportunity Loss – Despite being invested until maturity which may go up to 3 – 5 years also, it loses its investment value due to non-participation in equity. Equity mutual funds and balanced funds on the other hand can generate much better returns given the time frame with comparatively much fewer restrictions.

 

4. Very low liquidity – FMPs are highly illiquid. Once invested, the investor’s money is locked until maturity. Though they have the option to put an offer in a secondary market, such instruments are very thinly traded thus, making it unviable to liquidate in times of need.

 

5. Regulations and restrictions – Since SEBI is a governing body of mutual funds in India, their strict rules and regulations sometimes acts as a barrier for the fund manager in taking higher risk or independent calls to exploit available opportunities in the market.

 

6. Difficulty in selecting the right plan – With the number of fund houses and options of plans that exist in the current scenario, investors are left confused with where to invest and how to choose the best plan and sometimes end up picking up the plan with very poor growth prospects. Hence, one should always take advice and use the expertise of financial advisors.

 

7. Low Flexibility – Since money invested in FMPs is locked until maturity, investors have very little scope of withdrawing funds and take corrective action by diverting funds to other avenues when the debt market does not look good.

 

 

WHO SHOULD CONSIDER INVESTING IN FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLANS (FMP) are most suited to the following investors:

1. Moderate risk takers – FIXED MATURITY PLANS (FMP) offer much better post-tax returns under the debt funds category however, it also involves a higher level of credit risk and interest rate risk. The value of the fund is determined by its NAV which is declared on a daily basis. The NAV is largely influenced by market forces and various bond prices they have invested in. Hence, FMPs involve a higher risk of interest rate fluctuations and sometimes the risk of principal loss as well.

 

2. Investors looking for diversification – Investors who are overboard on equities and want to create a debt portfolio can consider investing a small portion of their investible surplus in FMP to diversify and create a retirement corpus.

 

3. Investors seeking predictable returns – Investors looking for better returns than other debt instruments and have an appetite to take some level of credit risk and risk of interest rate fluctuations can consider investing in FIXED MATURITY PLANS (FMP).

 

4. Young Investors – Those who have just started earning, unmarried and below 30 years of age can consider this option as such class of investors have a higher risk appetite.

 

5. Investors in higher tax slab – Investors who are looking for moderate but predictable returns and fall under the higher tax slab of 20% or more can invest in FMPs as the income earned out of FMPs falls under “Income from Capital Gains” and taxed at 20% after indexation benefit.

 

 

WHO SHOULD AVOID INVESTING IN FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLANS (FMP) may not be the best investment for the following investors:

1. Investors with short term liquidity needs – FIXED MATURITY PLANS (FMP) has a lock-in until maturity. Hence, anyone looking forward to liquidating their investment before maturity may not be able to do so. The only way out is to sell their investment in the secondary market. Even there, this instrument is very thinly traded making it difficult to sell.

 

2. High risk takers and young investors – FIXED MATURITY PLAN (FMP) is a debt-oriented instrument and may not be suitable for investors who want to earn double-digit returns and beat inflation. Especially in case of young investors who have just started earning and have a long time horizon for various financial goals can invest partially in this instrument for diversification and consider investing in equity mutual funds or stocks.

 

3. Investors nearing retirement – Investors nearing retirement should take very limited exposure to investments involving high volatility. Such investors may need funds soon and any market correction or fall can put their retirement planning at risk. For such investors, other debt products are safer and more stable which they can invest in.

 

4. Senior Citizens – Individuals above 60 years of age who are not willing to take any risk of market fluctuations and need regular income consistently should avoid investing in FIXED MATURITY PLANS (FMP). Instead, they can invest in other debt instruments like monthly income plans, senior citizen savings scheme etc.

 

5. Investors looking for regular income – FIXED MATURITY PLANS (FMP) do not generate a regular income for its investors. The interest and any price appreciation in the value of the FMP is accrued and paid with the principal on maturity.

 

 

A PIECE OF ADVICE

THINGS YOU SHOULD DO WHILE INVESTING IN FIXED MATURITY PLANS (FMP)

FIXED MATURITY PLANS (FMP) investors must follow the below suggestions while investing to maximize the value of their investment.

1. Perform due diligence – Never invest in mutual funds before verifying the credentials of the company and checking their credit rating. Usually, companies with low ratings try to lure investors with attractive rates. But don’t fall in the trap as they are very risky. One should thoroughly study the risks involved in such instruments.

Also, investors should be aware that though in a way are considered as s, they do not guarantee returns. Thus, returns they generate completely depend on the performance of the company they have lent money to and various macroeconomic factors.

 

2. Know your investment goal – One should bear in mind all pros and cons of investing in fixed maturity plans. FMPs have a lock-in until maturity and investment in such plans are mainly meant for medium to long term financial goals having a horizon of 3 to 5 years or more.

 

3. Always diversify – The safest way of investing is to diversify your risk across various asset classes and other schemes of similar profile. Concentration in one particular scheme or asset class can be very risky and may result in loss of capital. Similarly, refrain from over diversifying the portfolio as it may dilute your overall gains.

 

4. Know the pros and cons of investing in direct plans – Though investing in direct scheme is cost-effective due to lower expense ratio, it loses the edge in the form of expert advice and services of your financial planner. Their attention and expertise in the subject can help you achieve much better returns which may surpass the saving you would have had by investing in direct schemes. As it is rightly said, sometimes, saving pennies can cost you fortune. Hence, choose a regular plan provided your portfolio is being managed by a competent financial advisor.

Some broking houses also provide a user-friendly and robust online interface to help you keep track of your investments and manage them effectively. It not only gives you a single-screen view of all your investments across different fund houses but also lets you carry out transactions at your ease. The only downside of having a middleman or a broker is higher expense by a very small margin to accommodate their commission payout but that is small enough to make a significant difference to your investment kitty.

 

5. Consider risk involved – Some of the FMPs take high exposure to bonds of low rated companies to lure investors with attractive rates. This increases the credit risk for all investors. Hence, one should check the details of the bonds and companies where the money will be invested and stay away from funds that invest heavily in poorly rated companies to avoid unpleasant surprises in the future.

 

6. Compare expense ratios – “Expense Ratio” refers to the charges involved in investing in mutual funds. Hence, always compare the expense ratio while investing, especially among the funds which are identical in all aspects. Hence, lower the expense ratio, higher the returns.

 

7. Update nominee details – Updating nominee details with the respective fund houses is very important. In case of an investor’s death, the family members should not end up running from pillar to post when they need money the most to claim your investment proceeds.

 

 

THINGS YOU SHOULD AVOID DOING WHILE INVESTING IN FIXED MATURITY PLANS (FMP)

FIXED MATURITY PLANS (FMP) investors must avoid indulging in following practices while investing to protect their investment from losing its value.

1. Selecting a fund only based on past returns – Though past performance is one of the most important determinants of fund’s credibility, it should not be the only deciding factor while picking up the investment. The glorious performance in the past can be a result of various factors that may or may not exist in the future. Hence, one should make a note of sectors the fund is exposed to, the track record of the fund manager, etc while making a decision.

 

2. You can foresee the need for funds before maturity and still investing – FMP has a lock-in until maturity. Hence, anyone looking forward to liquidating their investment before maturity may not be able to do so. The only way out is to sell their investment in the secondary market. Even there, this instrument is very thinly traded making it difficult to sell.

 

3. Investing during increasing interest rate scenario – Fixed maturity plans also take exposure to bonds of various companies. Bond prices are inversely related to market interest rates. It means that the bond prices start to fall when market rates increases and vice-versa.  This happens because bonds issued at a coupon rate of 6% per annum loses its value if market rates go up to 7% per annum as new bonds are now available at a 1% higher coupon rate.

 

4. Investing in direct schemes – Though investing in direct scheme is cost-effective due to lower expense ratio, it loses the edge in the form of expert advice and services of your financial planner. Their attention and expertise in the subject can help you achieve much better returns which may surpass the savings that you may have by investing in direct schemes. As it is rightly said, sometimes, saving pennies can cost you fortune. Hence, choose a regular plan provided your portfolio is being managed by a competent financial advisor.

 

5. Getting carried away with attractive returns – Higher returns also involves higher risk. Never invest in any scheme before verifying their risk profile and portfolio composition. Usually, some schemes take very high exposure to companies with very low ratings to lure investors with attractive returns. But don’t fall in the trap as they are very risky.

 

6. Borrowing money to invest – A lot of brokers or agents will lure you with attractive returns however, one should understand the risk involved in fixed maturity plans. How much ever promising the investment looks, one must be very careful about fundraising methods. Never borrow money to invest in these instruments as these avenues are highly risky and there is a possibility where all your money can vanish if the investment fails.

 

7. Do not get influenced by anyone but financial experts – A confused investor always has a tendency of reaching out to their friends and relatives for suggestions while making critical investment decisions. That happens irrespective of the knowledge and the level of understanding the friend has about the domain. It is as good as asking a truck driver, how to fly an airplane. Such advices in most cases are based on their individual experiences and hardly on calculations or facts and figures. Hence, instead of blindly following the financial advice of a random friend, investors must act wisely and take assistance of a well qualified financial planner who has sound knowledge about the domain.

 

 

WHAT ARE THE RISKS INVOLVED IN FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLANS (FMP) investors should be mindful of the following risks involved in this investment:

1. Credit risk – Many investors expose themselves to a higher credit risk by investing their money in companies with low credit ratings. They take such risky calls to earn higher interest and returns on their investment as these companies are always willing to pay more due to the weak market reputation. Many times these companies start defaulting in making timely interest payments, sometimes even the principal.

Hence before investing in FMPs, one should always check the credit rating of the company they are investing in with the agencies like CARE, CRISIL, FITCH, etc.

E.g. A few FMPs holding paper of Zee/Essel Group in 2019 have come up for maturity in April. On maturity, these schemes were supposed to pay back the full amount to investors which include principal plus earnings on the portfolio. However, since these FMPs have papers belonging to Zee/ Essel Group in their portfolios, one fund house repaid investors total sum minus their holding in Zee/Essel paper. Another fund house has proposed to roll over its FMP by a period of 380 days.

 

2. Interest rate risk – It refers to a risk where bond prices lose its value due to an increase in market interest rates.

For example, a purchased at a coupon rate fixed at 6% will lose its value if the market rates go up to 7% and fresh are available at a better rate. In such a scenario, the demand for you are holding will fall as nobody would like to buy offering a lower rate than current market rates. With this, the price of the will fall causing the NAV of the debt fund to fall as well thus denting your investment. Hence, be very careful while selecting FMPs that do not take much exposure to such risks.

 

3. Inflation risk – Though FMPs involves low risk and give predictable returns, the downside is, the returns it generates may not be good enough to beat inflation year on year. The average rate of inflation is around 8% per annum whereas average returns generated from fixed-income investments are less than 7% or even lesser in many cases. This may lead to shortfall when you look at the corpus you created in meeting your financial goals. Hence, it is very important to study the fund you are investing in and go through its past performance and prospects.

 

4. Liquidity Risk – Fixed maturity plans (FMP) take exposure to bonds and debentures which can only be liquidated at the time of maturity. This makes it less flexible From a liquidity point of view and allows its investors to exit the investment only on maturity.

 

5. Concentration risk – Certain FMPs invest in bonds issued by companies of a particular sector or take a very high exposure to one sector. Due to this, the fate of investors is largely dependant on the performance of that particular sector. This increases their exposure to risk due to over-concentration. Hence, the portfolio composition of the fund should be looked at very carefully while choosing the fund.

 

 

HOW TO SELECT THE BEST FIXED MATURITY PLANS (FMP)?

FIXED MATURITY PLANS (FMP) investors must follow the below instructions before signing up for the product to ensure the safety and growth of their investment.

1. Know what you are buying – Though returns are important, that should not be the only deciding factor. Investors should also know where the returns are coming from.

The credibility of the companies you have taken exposure to matters the most. Some low rated companies involve a high risk of volatility including the risk of principal loss. Hence, one should consider their risk appetite before investing and should not end up investing in high-risk instruments if their risk appetite is low.

Also, read its scheme information document carefully to understand the nature of the scheme and to check if its goals are in line with yours.

 

2. Know about the fund manager of that particular scheme – Fund manager is the key decision-maker of any scheme and they are the ones who run the show. It is very important to learn about their background like their qualifications, past performance, work experience, expertise in their line of business, a character like whether they have indulged in any unethical activity or have any criminal charge against them, etc. Also, their financial health and investment intelligence should not be ignored.

 

3. Check portfolio composition – When the scheme is focussed on a particular sector then the risk also gets concentrated on the performance of that particular sector. A slowdown in that particular sector can derail your overall investment. Hence, look for the fund that is evenly diversified across various companies and sectors.

 

4. Select technologically sound brokers – If you are investing through independent brokers then make sure they are well equipped with modern technology and systems. This will not only help you keep track of your investments online but also help you in making investments and redemptions yourself without depending on anyone.

 

5. Assess liquidity requirements – These funds have lock-in and are only meant for investors who can stay invested until maturity. Hence, one should avoid investing in fixed maturity plans if they foresee any expenses coming up before that period.

 

 

TAXATION RULES FOR FIXED MATURITY PLANS (FMP)

FMPs are a part of debt mutual funds. And income earned from mutual funds is termed as “Income from Capital gains. However, the amount of tax applicable will be determined by the period of holding.

Investments held in debt funds for less than 36 months are considered as short term capital gains and anything beyond 36 months is termed as long term capital gains.

Earnings from short term capital gains will be added to your total taxable income and will be taxed as per the applicable slab. And in case of long term capital gains, the tax applicable will be 20% with indexation benefit.

 

 

DOES ANY OTHER PRODUCT OFFER BETTER PROSPECTS THAN FIXED MATURITY PLANS (FMP)?

A FIXED MATURITY PLANS (FMP) can be beaten by the following products on various grounds.

1. From a safety point of view – Fixed Deposit is safer as compared to FMPs as the returns it generates are fixed. Also, it carries a relatively lower credit risk if booked with reputed companies. FDs are however most tax-inefficient options which can further lower your post-tax returns.

 

2. From the returns point of view – Balanced funds generate better returns as they participate in the equity market too.
Equity mutual funds, on the other hand, generate even better returns in the long run however it carries a higher risk of principal loss as they invest directly in the stocks of various companies.

If someone is looking for even better returns and has a high-risk appetite then they can invest in or of various companies.

 

2. From a liquidity point of view – FMPs come with a pre-defined lock-in and are highly illiquid. Hence, someone who is expecting any major expense soon can consider investing in liquid funds or ultra short term funds which not only generates decent returns but also offer high liquidity.

 

 

HOW TO INVEST AND DOCUMENTS NEEDED?

1. Update KYC – The first and the most important requirement is updating KYC details with the registrar. This can be done by submitting the KYC form with your PAN card and address proof to CAMS office or your investment advisor or AMC.

 

2. Create a profile with a broker or a fund House – Then the profile needs to be created by updating your details with the registered broker or a fund house to open your account.

 

3. Register Online – Once the account is opened, one needs to set up a user ID and password to register online or on mobile application and then start making transactions.

 

4. Offline Mode – One time transactions can also be executed offline by filling a form of the particular AMC and issuing a cheque. To start SIP, the investor needs to sign the SIP mandate which specifies the amount and period of investment to set up auto-debit on the account.