Are You A Digital Investor? Know Pros & Cons Of Mutual Fund Investing Apps

Mutual fund investing, until recently, was shrouded with several misconceptions and was largely limited to people with access to wealth managers and/or a large amount of capital. Digital platforms have managed to break down a majority of these barriers, and have made investing easier and more accessible for a wide variety of segments and financial needs.

Apps, and technology at large, have been game-changers across industries – and the world of investing is no different.

Easy Start

Besides increased accessibility, convenience is undoubtedly one of the foremost pros of mutual fund investing apps. Take the process of KYC, for example. Today, you can simply upload your documents, verify them online, and share them across whichever platforms you may be using rather than having to initiate a new KYC process by physically printing, attaching, signing and submitting the requisite documents every time you want to update your financial portfolio.

Automatic Investing

Another huge factor that lends weight to the ease and convenience of investing apps is unquestionably, automation. When it comes to investing, discipline and consistency are of utmost importance as these fuel the compounding of your money further – yet, this is often the most difficult part. Automatic investing comes to the rescue here – all investors have to do is mandate an amount and frequency, and the rest is the investing app’s prerogative.

It also helps that investors often have the option to micro invest in mutual funds through these apps. This means that there is no burden on the investor to first save large sums of money in order to invest – they can start investing with as little as Rs 10 to  Rs 100.

Add to this the cost-effectiveness of these apps, whether through zero-fees usage, or minimal subscription charges, and you have a winner on your hands.

Caution

Now, this isn’t to say that there aren’t any limitations to investing in mutual funds through apps. The very ease that has made investing more accessible, is also often the reason for more impulsive decisions.

With more and more Telegram groups sharing generalised financial advice, social media personalities making recommendations and owing to the overall trigger-happy world we live in – investors, especially young beginner investors, can and do fall prey to making investments without first researching, analysing and reviewing for themselves whether or not an investment is safe and whether it aligns with their financial parameters.

But the good thing about limitations, is that knowing about them is the key to overcoming them.

It is essential to understand that the rise of investing apps does not change the fundamentals of investing. It is called personal finance for a reason – it is crucial for any investor to understand their own individual needs, goals and restrictions and align their choice of investment platform and investments accordingly.

– The author is Founder and CEO, Deciml. Views expressed are personal.