Zerodha Coin Overview
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 through exchanges.
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.
- 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.
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.
The Darker Side of Zerodha coin
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).
Disadvantages of Zerodha Coin
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).
Advantages of Zerodha Coin
- 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.
You can check the details further, you can check the review of Zerodha Coin