8 reasons why app-based investing is a game-changer for the first-time investor

Since the DIY (do it yourself) investing model came into being, financial products like mutual funds have only become more popular in India. While in 2016-17, the annual Systematic Investment Plan (SIP as it is commonly known) contribution stood at Rs 43,921 crore, in 2019-2020, in less than six months alone, that number has touched Rs 32,867 crore.

This is a clear indication of the growth of popularity of financial investment products, and there’s no doubt that app-based and online investment platforms have played

a considerable role in this. The platform empowers individuals to build and manage their own investment portfolios, without having to depend on agents or third-party financial managers. In fact, Groww, one of India's largest online mutual fund investment platforms has over two million users, and it has achieved this number in just two years since it started up in mid 2017.

It’s not difficult to see why app-based investment platforms have become a game-changer for a new generation of investors who are actively exploring and investing in mutual funds all on their own. And if you’d like to do a bit of app-based investing yourself, here’s what it takes to start.

1. Zero commission fees and easy starts

On Groww, everything is facilitated online - from KYC to demat accounts or linking the two to a bank account. This means that investors aren’t being bogged down by a complicated and time-consuming manual process.

What also makes online investing a more feasible option is that there are no hidden commission fees. Traditionally, regular plans involves a commission being paid (by the Mutual Fund companies) to the intermediary - an advisor, broker or distributor.

In addition, even when customers choose to invest in direct plans via Groww they get access to Groww’s customer service.

2. Rs 100 a month or Rs 100,000 a year: the choice is plenty

Today, investors can start investing with as little as Rs 100, so not having enough money to invest is not a valid reason any more. Online investment platforms offer thousands of mutual funds plans via partnerships with multiple Asset Management Companies (AMCs), which has made it easier for an investor to choose the investment which works for them. In addition, investors can also choose to invest in SIPs or investment in lump sum via Systematic Transfer Plan.

3. A plan that works for every investor, every investment goal

No matter what the financial goal is or the amount of risk an investor is willing to take, or the amount he or she wants to invest, there’s always a mutual fund that fits the bill. From a solo trip to Europe, higher education at a leading university abroad or the first car, there’s an investment plan that aligns with all investment goals.

Traditionally, it has been challenging for investors to decipher which investment works best for them and why, or determine the amount that they need to invest and attain the desired goal, but app-based investment platforms have changed this dynamic. For instance, on Groww, the mutual funds are presented in such a way that investors can easily make an informed decision. The investment plans in the app are categorised as high growth SIP Portfolio and top tax-saving ELSS mutual funds and so on making it easy for investors to tie these back to their goals. In addition, the investor can deep dive into a particular plan to see why it could be the best match for them. The entire decision-making process is made clear and fuss-free with information such as fund ratings, a SIP or a one-time investment calculator, reasons to choose either of these, expected returns for different time frames such as one year, three years and five years, the ideal investment duration for the said fund and the rationale to invest in the particular portfolio.

4. Tailored according to an investor’s risk appetite

One of the critical factors while investing is to assess how much risk you are willing to take and while considering factors like income, expenses, financial responsibilities, the time left to realise your investment goal and liquid cash to meet unexpected personal expenses. For instance, while an investor may have a high income, if there’s a big financial responsibility in the near future, it’s ideal not to take aggressive risks. Also, from a funds perspective, short-duration funds like Liquid Funds have low risk while Arbitrage Funds have a high risk, a long duration (5 years and above) large-cap funds may have a low risk compared to midcap or small funds. Traditionally, it would have been difficult for first-time investors to access these details, but app-based investments have made it easier now. Good platforms highlight the risks at the outset. For instance, on the Groww home screen, where it highlights the best performing funds, the intensity of the risk for that particular fund is tagged as moderately low, moderately high etc.

5. Manage old investments with ease

A big challenge for investors who have gone the agent/bank way to start investing is that for any redeem or SIP-cancellation request, they need to call the RM or visit the bank. With features such as ‘track’ investments on these mobile-apps, one can pull their investments and manage them on the mobile itself, without anyone’s dependency. In a way, these Apps are giving ‘control’ of your money to you, from the agents.

6. A community to bank upon

With constant fluctuations in the markets, first-time investors will need to stay current on their investments and also take informed decisions. This is where some guidance and suggestions from experienced investors will come in handy. And, that’s why online investment platforms today are invested in growing their community, where there is constant knowledge-sharing with experienced investors, fund managers, and the likes sharing their insights. Harsh Jain, Co-Founder of Groww says, “One of the things we found through interactions with our early users is that they find it easier to invest by interacting with experts. That is why we do a lot of AMA, Webinars, Industry-expert Q&A etc.”

For instance, on Groww’s YouTube channel, there are tutorials on the basics of mutual funds by industry experts to investment advice. And, with Groww looking to launch stocks on the platform, the channel also has in-depth videos that offers in-depth analysis on a particular stock, demystifies daily news, etc.

7. Transparency

With live dashboards updated every day with the performance of their investments, their net worth etc, online investment platforms make it easy to keep track of their investments. All it takes is a few clicks, taps or swipes to see if the investments are working for you.

With the aim to make the platform as transparent as possible Groww has designed it’s UX to make investing simple and transparent. It visualises all relevant information in an easy-to-understand dashboard.

8. Learn on the go

Like most things in life, investing is a journey and you learn the tricks of the trade only when you take the plunge. Investors, therefore, don’t really need to have knowledge of topics such as the difference between open-ended funds and interval or passive funds or the sub-categories in debt, equity and hybrid funds – right at the start. A first-time investor who starts small is likely to get a better understanding of how investments work by monitoring the health of their investments in time, and it won’t be long before they can spot underperforming funds, or when it is time to switch funds.

“Ideally one should not change investments too often. For equity funds, review and rebalancing it once a year works.” advices Harsh. He adds, “But, given that most first-time investors have hectic schedules, managing their lives and jobs, we make learning easy for them by sharing easy-to-understand updates, actionable inputs, and related notifications regularly. And, we have seen that people tend to be appreciative of these efforts.”

9. A trusted partner

As an enthusiastic DIY investor, even after browsing the app and reading up, you might be still unsure which mutual fund is the best for you. Even then, to take the next step and start investing, all you need to do is share your requirements, the minimum amount you are willing to invest, whether you want to invest via SIP or a lump sum amount, what duration you are willing to invest for, etc. And platforms like Groww will help you out. Infact, over 21 lakh users on Groww, a majority of who are first-time investors, will vouch for this.

10. A new appeal

With enhanced flexibility, tailored products that align with an investor’s needs, a strong knit community and ease of investments, today the DIY model brought in by online investment platforms have made investments appealing and attractive.

With DIY, no longer are mutual fund investments reserved for those with numbers expertise or a fat bank balance. It has shed its fuddy-duddy tag and has suddenly become the new kid on the block that everyone wants to know more about.