Mutual Funds: You can also invest in mutual funds with cash, but what are the rules regarding this?

Mutual funds have become quite popular among investors today. ​​Through a mutual fund, you can invest in various securities or even similar securities through a single fund. You can invest in mutual funds using any brokerage app. But can you also invest in cash through these brokerage firms?

Can you invest with cash?
According to the rules, some people are exempt from certain regulations regarding mutual fund investments. This means that it is possible to invest in mutual funds using cash.

Who can invest with cash?
Generally, investing in mutual funds with cash is not allowed. However, some people are exempt from this rule. According to the regulations:

Individuals who are not taxpayers and do not have a PAN card or bank account can invest in mutual funds using cash.

This includes farmers, small traders, business owners, laborers, etc.

The only condition is that the investment through cash in mutual funds is limited to ₹50,000 per financial year.

Under which rule is this permitted?
This is mentioned in the Prevention of Money Laundering Act, 2002.  SEBI has also stated this in its Anti-Money Laundering (AML) circular. Furthermore, this rule is mentioned in the AML regulations and guidelines. However, it is important to note that only small traders and residents of India can avail of this benefit. Minors investing through their guardians are also eligible for this facility.

What is a Mutual Fund?
Mutual funds allow you to invest in the stock market indirectly. You don't need a lump sum amount to invest. You can invest in mutual funds in installments through a Systematic Investment Plan (SIP). The best part is that you can choose your investment amount and duration.

However, you will have to pay charges and taxes when investing in mutual funds. Therefore, consider these factors before investing.

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