Investing online, 3 things to know

Do you put off investments just because it entails several trips to offices and filling up of innumerable forms? While a financial adviser can be of help, not many people have one. It can be even more challenging if you are considering investing in multiple products. It is for such people that online investment works best. Several portals now offer the convenience of investing and transacting online in multiple products, though most are focusing on mutual funds as of now. Here's what you should know about managing your investments through these portals. 
What is on offer?
While most brokers offer their clients the facility to invest in shares, mutual funds, debentures and company fixed deposits, there are limitations in terms of the choice of products and charges levied. Most independent investment portals, however, offer a wide range of options without additional charges, such as fee for opening an account or transaction charges for using these platforms . They make money through commissions earned from product manufacturers. While some portals like FundsIndia offer multiple products, others like Fundsupermart and Scripbox provide solutions for a single product category, that is, mutual funds. InvestOnline claims to be among the first to start operations in this space. "We offer the option of an online SIP, which is completely paperless right from making the first investment," says Abhinav Angirish, founder InvestOnline. 

FundsIndia, which started as a mutual fund solution provider, now allows to invest in company fixed deposits and NCDs, and also enrol in the National Pension System (NPS). 

Scripbox, which only offers mutual funds, allows investment in a basket of up to four funds, which are pre-selected scientifically and considers only the schemes that have consistently outperformed the Nifty in the past. The performance is reviewed annually, and if the rules determine that a previously selected fund should no longer be a part of the basket, the investor is given the option to exit and invest in a revised basket or stay with the old one. 

Convenience
These portals not only offer convenience, but also the benefits of zero cost and a wide range of options. All you have to do is create an online account with the portal, after which you can access mutual funds or other instruments on offer. These sites have tie-ups with most leading banks, which enables seamless online transactions (one can set up an ECS mandate with the bank for SIPs). It also eliminates the need to remember multiple logins and passwords. You can also create a separate account for each family member and consolidate all investments. 

All the portals offer investment in mutual funds with access to schemes across fund houses. However, in the absence of an advisory, you need to be clear about the purpose of investing and your risk profile before choosing a product. Some portals do provide tools to design a mutual fund portfolio tailored to your requirements, based on your risk profile and goals. Most also provide the option of setting up SIPs and systematic transfer plans (STPs) in multiple funds. 

Is your money safe?
While the convenience is compelling, can these portals be trusted with your money, especially if the firm shuts down? Investors need not worry on this front. All portals make use of standard security protocols for online transactions , so all money transfers are adequately secured. 

Also, in most cases, the portal does not have access to your funds. Your account is linked to your bank account, so that when you place instructions online , the bank transfers the amount directly to the fund house. When you withdraw or redeem the investment, the company transfers the money directly to your bank account. Investors can also keep track of their money by verifying the authenticity of any transaction with statements from the fund company or RTA. 

If the portal closes down, your existing investments won't be affected as all assets are held in your name (in funds, the folios are maintained by RTAs like Karvy and CAMS) and, hence, protected. Says Srikanth Meenakshi, director, FundsIndia: "Since the investors' money is held in their names, they can continue to access it in any such scenario." So when Moneysights, which offered mutual fund investment, shut down recently, its clients were given a notice to redeem investments. Those who couldn't, had to shift to another broker to carry on investments in existing funds. The only inconvenience is that a fresh SIP mandate will have to be given.ey is held in their names, they can continue to access it in any such scenario."

So when Moneysights, which offered mutual fund investment, shut down recently, its clients were given a notice to redeem investments. Those who couldn't , had to shift to another broker to carry on investments in existing funds. The only inconvenience is that a fresh SIP mandate will have to be given.