Mutual Funds

Why You Don’t Need A Demat Account To Invest In Mutual Funds

Save & Invest

Funds are an essential part of everyone’s investment portfolios. Mutual funds are an excellent way to diversify risk across multiple investments and asset classes such as stocks, bonds, and commodities. However, you don’t need a Demat account to invest in mutual funds investment plans. This makes it easier to start investing in them if you haven’t already started. In this article, we’ll explore the various ways you can invest in mutual funds without getting your Demat account.

What is a Demat account?

It’s an account that you can open to buy and sell stocks, shares, and securities. It’s an electronic platform where investors store their bought securities, such as equities in a virtual wallet. This type of account is available to individual investors as well as institutions. Getting a Demat account makes it easier for you to trade online and invest your money in various investment instruments because you don’t have to go through the process of opening an entirely new brokerage account.

However, you don’t need a Demat account to invest in mutual fundsMutual funds investment plans are offered by mutual funds companies that employ experienced portfolio managers to manage the investment. All you need to do is contact the company with which you want to open an account and request a mutual funds investment plan.

Advantages of having a Demat account to invest in mutual funds 

Finding mutual funds investment plans that suit your risk profile may be challenging without a Demat account. 

If you invest directly in mutual funds investment plans, you may incur higher brokerage costs and taxes. The market value of the securities in your account may fall below the cost of buying them, or you may need to sell the shares for other reasons.  

Unless you want to hold all your mutual funds investment plans in physical form, a Demat account can provide benefits like lower transaction charges and more convenient stock transfers. However, many investors don’t want their money stuck inside trading accounts, so they look for the best mutual funds to invest in. Investors with large portfolios can benefit from having their investments placed in mutual funds with no lock-in period or minimum contribution amounts because the best mutual funds to invest in do not require opening a Demat account. 

Other benefits of holding mutual funds investment plans in a Demat account include increased liquidity, ease of transferability, and less time-consuming paperwork. However, there are certain disadvantages associated with these funds. For instance, transferring holdings from your name into someone else’s name might be necessary. A lot relies on how much flexibility you desire in your trading frequency and the type of mutual funds investment plans you are interested in.

What are the alternatives to having a Demat account for mutual funds?

Investing in mutual funds can be a great way to start saving for retirement or just saving up some money for a rainy day. However, you don’t always need a Demat account to invest in mutual fundsMutual fund investment plans offer investors a simple way to invest while keeping assets safe.

It might seem like a Demat account is an important part of mutual funds, but it is one of several ways to invest in mutual funds. Many companies offering the best mutual funds to invest in have a wide variety of options available to investors which don’t require them to open a special type of account. Of course, if you’re looking for a more hands-on approach to investing in mutual funds, it’s still possible to do so without opening a Demat account. 

Investing in mutual funds investment plans is a great way to diversify your portfolio and access investment opportunities that you may not have otherwise. Unfortunately, it can be difficult without a Demat account because these types of accounts are typically needed for purchasing the best mutual funds to invest in. Fortunately, alternative methods exist for investing in mutual funds investment plans without a Demat account. 

  1. Many companies allow you to purchase shares of their mutual funds using a bank transfer from your current account. As long as the transaction is funded by cash or a loan from your current bank, it will count as investing in mutual funds without needing a Demat account.
  2. Online brokers often allow you to invest in mutual funds without opening a separate account. They do so by accepting orders for the best mutual funds to invest in. Buying shares of mutual funds through these transactions does not cost anything because they are carried out electronically rather than on paper.
  3. You can purchase units of the best mutual funds to invest in by opting for systematic investments annually. These plans allow you to buy one or more plans simultaneously.
  4. Alternatively, if you want more flexibility than periodic investments, SIPs might be a good option. With SIPs, your money goes directly into the mutual fund’s investment plans of your choice every month or quarterly, depending on which option best suits your needs. Another benefit of this method is that you do not require brokerage services like those offered through a Demat account. 
  5. Finally, another way to invest in mutual funds without a Demat account is by purchasing units of cooperative banks’ shares. 

So, while having a Demat account helps while investing in mutual funds, there are plenty of other ways to go about it!


Mutual funds are a great way to diversify your portfolio and find investments for the long term. If you are looking for a low-cost, low-risk way to start investing, mutual funds investment plans are the way to go. And if you already have a Demat account you never use, don’t worry: having the best mutual funds to invest in is not necessary. Just open up an account with any mutual funds company of your choice, fund it with some money, and then purchase some units or shares of the best mutual funds to invest in

If you need help with finances, you can always contact experts such as Piramal Finance to guide you through your financial worries. They will suggest which mutual funds are best for you to invest in and help take care of your personal finance requirements if any.