Zerodha Coin is a recent initiative from Zerodha, a leading discount broker in India, for direct mutual fund investments through the platform. This has been introduced post a recent circular from SEBI that allows retail investors to invest in mutual funds in demat form (via a demat account) through exchanges.
Zerodha Coin is one such direct mutual funds investment platform that allows you to invest in mutual funds directly. As per the claims made by the broker, there are over 2000 mutual funds available in the platform to choose from.
Zerodha Coin – Why do You Need?
Conventionally, if you have been investing in mutual funds, there have been two ways to do it:
Through Local Distributors:
Distributors are third parties that help you to invest in specific mutual funds, do your paperwork and place your investments against those funds. They certainly make the overall process of investment smooth for you, but there is a negative side to it.
These mutual fund distributors earn upfront 1.5% commission depending on your investment value and then consistently make another 1.5% trail commission every year as long as you stay invested with those mutual funds. These commissions eat out your investments, thus, cutting down on your returns.
For instance, if you invest ₹5000 per month for 5 years (assuming your investments are making 15% returns per year), then these distributors will take away more than ₹16,500 as commissions from your investments. These commissions, obviously, increase cumulatively with your investment period. Most of the investors don’t realize this concern and end up paying these distributors every investment year.
Furthermore, with the advent of e-commerce, a lot of financial portals are providing the same service online as well. However, the business model remains the same.
And to remind you, there are no services that are provided by these distributors. The only help, one receives is the initial help in buying mutual funds and that’s it!
Directly from the Fund House
You can also invest in mutual funds directly through the fund house. For instance, if you want to invest in Kotak Securities Focus fund and Reliance Money fund, then you would be required to either browse mutual fund house’s website or visit their offline branch of office, fill up few forms and invest into the fund.
The concern using this particular method is that you would be required to fill out all those forms individually of the funds you are interested in. At the same time, you would be needed to track these funds, get the statements on your own. Thus, a lot of involvement from your end would be required.
This is where Zerodha Coin comes into the picture. Zerodha Coin allows you to invest directly in mutual funds in DEMAT form like you invest in Equity, Currency or other segments. With Zerodha coin, you can directly buy mutual funds online through Zeordha portal. The best part of Zerodha coin is that it does not charge you any brokerage whatsoever.
Zerodha Coin also prescribes you few high performing mutual funds through the portal with return percentages and investment period.
If you subscribe to Zerodha Coin, you do not need to pay any commission based on the monetary value of mutual fund investment, like what happens in the case of distributors. You need to pay ₹50 per month irrespective of the value of your investment.
So, even if you are investing ₹10,000 or ₹50,000 a month or ₹20 Lakhs a year, you would be required to pay ₹50 per month or ₹600 per year for all your mutual fund investments.
The best part is, the first investments of ₹25,000 require no subscription and is free in nature. However, once your cumulative investment (interest earned included) increases more than ₹25,000 – the subscription charge of ₹50 starts applying.
In other words, if you start a SIP of ₹5,000 a month – then your first 5 months will have no charge. From 6th month onwards, you will be charged ₹50 per month until the time you run your investments.
From August 2018, Zerodha has made investments through Zerodha Coin completely free. The broker has left even the ₹50 per month charge (mentioned above) after getting quite a reasonable competition from players such as Paytm.
However, this could be a temporary offer and the charges can go back to the ones mentioned above whenever the broker feels like. Nonetheless, feel free to use the app for free till it is!
Zerodha Coin: Grey Side
If your SIP value is less, let’s say ₹2,000 a month. For the first year, you will not be charged anything. But from 2nd year, you will be charged ₹50 on your ₹2,000 investments or 2.5% of your investment, which is pretty high honestly (almost close to distributor model or maybe more than that in shorter -term).
Thus, Zerodha coin is suitable for investors who are looking to invest relatively higher fund values.
In case you are stuck while using this application, in the name of Zerodha Coin customer care, there is only an email id for support provided by the platform. You may also choose to get in touch with Zerodha Customer care as well.
Zerodha Coin Fund transfer
If you are someone who has regular mutual funds plans running and wants to move to Zerodha coin with those funds intact, you can do so, however, the process involved is relatively complicated (depending on the demat mode you have used to buy those funds).
Here are a couple of ways you need to follow:
Option#1: Regular Funds in Demat Mode
You need to request DIS (Delivery Instruction Slip) from your current broker/agent with details such as the fund names you are looking to transfer, their respective quantity, your demat account number with Zerodha etc. The slips need to be submitted back to the broker and the funds will be transferred in a day or two.
This process requires you to pay nothing to your broker, although few brokers may ask some sort of hidden charges.
Option#2: Regular Funds in Non-Demat Mode
If your funds are in a non-dematerialized form, then you need to approach Zerodha so that these funds can go through the process of dematerialization. You may need to fill a couple of forms with the details of the funds to be dematerialized.
Once done, these funds will start appearing in your demat account and across the trading platforms offered by the broker.
Zerodha Coin Disadvantages
There are few concerns using Zerodha Coin as of now:
It’s a new initiative and untested in the market. Thus, it will take some time before the platform matures and gains user trust.
Not valuable for low monetary investments (as explained above).
Zerodha Coin Advantages
At the same time, let’s talk about some of the top advantages of this mutual funds investment platform:
No commissions, whatsoever, neither at upfront nor at trail level.
These mutual funds investments through Zerodha coin can be started, stopped or edited anytime as per user’s preferences.
Zerodha coin provides one single consolidated portfolio for all the investments across segments.
If you are looking to start investing though Zerodha Coin, provide your details in the form below and get started!
The best part is you don’t need to provide any documentation if you have Aadhar card with you.