Mutual Fund Investment, Online vs. Offline

Last month I decided to start couple of new SIPs (Systematic Investment Plan) in mutual funds and while doing that, I decided buy one scheme through an agent (SBI branch where my saving account is) and online through the SBIMF website (since I already have a portfolio and I am KYC compliant).

Here is my experience of investing in Mutual Fund Online as well as Offline and comparison of both as well.

Investing in Mutual Funds Offline through an agent

I walk into SBI branch where my account is and as usual, the guy with the responsibility of up selling Mutual Funds is happy to see me, even though I only have 1 SIP running. He wants me to start another SIP (falling short on targets), which I am already planning to do. He suggests me couple of funds to invest in and I collect the forms from him and head back home.

Check the performance of the suggested mutual fund online and satisfied, fill out the application forms. Slight hitch as I am unable to find my KYC acknowledgement letter. Couple of days later when I visit the branch again, I tell him the same and he assures me, he will take care of it, I just need to attach a photocopy of my PAN card.

Couple of days later (17th to be precise), I hand him the application forms; hoping my Mutual Fund would be purchased soon.

Nothing happens till the 30th, I visit the branch again and ask him why the funds still hasn’t been purchased. He says the guy who is supposed to process the application form was sitting on a lot of forms, planning to process them all at once and finally yesterday, he got him to do that. So my mutual fund should be purchased today itself and sure enough I get an SMS later, stating that Mutual Fund has been purchased.

However, this delay means that the market has regained 700-800 points, so the fund gets purchased at a higher value. Delay has happened at a time when the Bank was failing to meet its Mutual Fund selling target and branch manager was asking his own employees to start SIP to cover the shortfall!

Investing in Mutual Funds Online through SBIMF website

Since I had started a SIP earlier with SBI, not only was I KYC compliant, but also had a portfolio number, which gave me access to their Mutual Fund website, allowing me to buy/sell mutual funds online.

So while I was wondering at home, whether or not I would be able to invest through the agent, due to losing my KYC acknowledgement receipt, I decided to try my luck on SBIMF website.

Initially, filling up the form was pretty easy. But then it came time to choosing the SBIMF branch, at where the investment ought to be made and I was completely lost! There was a huge range of branches mentioned and after spending a lot of time going through them, I could spot SBIMF Online (or something like that) being mentioned and I chose that and submitted my application.

Now I was told to print out the form which got generated (with details filled) and submit that along with ECS Direct Debit form to the branch I had chosen at the below specified address. The only catch was, there was no links to form for ECS and neither was there any address mentioned below!

Bewildered, I decided to send an email to SBIMF customer care, expecting to get no replies from them and till date, I haven’t received any!

In the end, I used the ECS Direct Debit Form which I got from my local bank branch and fill it in and send it through registered letter to SBIMF’s main office in Delhi, at Barakhamba Road. This was done on the same day I had submitted SIP application at my bank’s local branch (17th).

On 20th, I got an email, informing me that a purchase had been made in my portfolio i.e. within three days of me mailing them my form through registered post!

Comparison between Investing in Mutual Funds Online and Offline

While filling out an online form is far easier and faster than offline application form, you do need a printer to print it out (else take the risk of taking it to a cyber café for print). Additionally, you need the Direct Debit Form, which isn’t given to you by SBIMF’s website (this may not be the case with other online investment portals).

In case of investing offline, you have an agent (usually friendly) to rely upon, as far as online investment goes, you are pretty much on your own and have to figure out stuff yourself.

Online Investment process, even with the step of mailing the application form, was a whopping 10 days faster than offline process, where I handed over the application form to the bank!

And this for me was a deal breaker. I mean why should I go through an agent who is obviously getting commission, when he works so slowly? Especially when I have finally figured out how to use the online investment option and investing online only requires one trip to the post office/courier company vs. couple of trips to the bank to first get the Application Form and then to submit it.

So at least for now, I have decided that in future, if I have to invest in Mutual Funds, I would rather do it online and hopefully continue to get faster service.

Oh yes, here is the SBI MF ECS/Direct Debit Form (1.16MB PDF) that I got from my bank, it obviously mentions the broker code of the bank. This may or may not make any difference, but it does seems to be acceptable while investing online through SBIMF website (at least in my case), so uploading it for others’ benefit. However, I take no responsibility on whether or not, this form will continue to work now or in future and those investing, should ideally first check with SBIMF customer care, before filling it and sending it to them.