Although there is a myriad of websites-cum-trading platforms for investing, there are three basic ways to purchase online mutual funds.
The most obvious option is to buy and manage mutual funds directly through investment firms. Mutual fund firms are selected from publicly traded entities. The company offers at least a few different funds, ranging from passively managed equity funds to high-yield bond funds that are actively managed, designed to attract many investors with their investment objectives.
The main advantage of buying directly from mutual fund firms: no sales commissions or brokerage fees. Most of your investment goes into the fund and you have the right to work. The main downside: Your investment options are limited to that firm’s fund family.
Investment-Cum-Financial Services Companies
If you do not want to be limited to one fund group, many investment firms allow you to buy and sell mutual funds and exchange-traded funds (ETFs) sold by other companies using an in-house account.
Another option is to open an online brokerage account. It would probably be the most expensive course: accounts of this type usually charge transaction fees/commissions for each exchange, and other account set-up and maintenance fees may also be a charge. However, they will provide the most massive universe of mutual funds to choose from online mutual funds.
Finding a relatively low-fee account is relatively straightforward, especially if you comb the ranks of discount brokerages. The hottest (and cheapest) companies are exclusively online.
Set up an online mutual fund account
Once you decide on your account financial institution and trading platform, you need to set up that account – which of course, you can do online. Most companies make this very easy- just log in to the company’s website and click on a link that is usually called Open an account or Let’s get started or something like that. To open any brokerage account, you must answer the same question: personal information, account type (individual or joint, IRA or taxable, etc.).
You may also need to tell if you want any fund dividends deposited to your account and be automatically reinvested to the fund. And you’ll need to provide bank account information, make a cash transfer for your initial investment — and, if you specify so, to be used as a source each month to purchase additional mutual fund shares. When you set up one of these automated investment programs, many companies reduce the amount required to open an account.
Applying online usually takes 10 to 20 minutes. Processing the application and getting your account funded usually takes one to three days.
Note: Once your account is activated, buying and selling mutual funds is easy. Although each site is somewhat different, they all work in the same way. Specify the ticker symbol of the fund you want to buy and the amount you want to invest – unlike stocks, mutual funds require you to invest a dollar amount instead of purchasing multiple shares.