Zerodha Coin Review
I invest in mutual funds through Zerodha Coin. So in this Zerodha Coin review, I will explain more about it, the charges, pros and cons. And we will see if you should use Zerodha coin or not for your MF inveastments.
Zerodha coin is a direct mutual fund investment platform from Zerodha, the biggest stock broker of India.
Zerodha is number one broker of India with highest number of active clients. I have written a detailed review about Zerodha here.
If you are a regular visitor to any bank, I’m sure you might have noticed that the bank employees trying to convince you to invest in mutual funds. Barring a few, most of them have their own interest than yours in advising you to invest in mutual funds. I’ll explain why.
In India, mutual funds can be purchased in two ways.
- Direct method
- Regular method
In direct method, you purchase the MF units from the AMC (Asset Management Company) directly. AMCs are nothing but mutual fund houses such as Franklin Templeton, Birla Sunlife etc. SEBI recently has made it possible to invest in mutual funds directly.
In regular method, you buy the units from the AMCs through a distributor, advisor, agents. The AMCs instead of spending on marketing and other maintenance overhead, pass the amount in terms of commission to these middleman. The commission is charged from the investment of investors.
The commissions are charges as expense ratio. It depends on funds to funds. It goes upto 1.5% both on initial investment and on trail (yearly deduction as long as you keep invested)
- How to identify that you are investing in Direct scheme?
If you are investing in mutual funds through distributors, you are essentially investing in regular schemes.For example, even if you buy them through demat account of your stock broker like ICICI Direct or Sharekhan , your are buying a regular plan.
Distributors like Scripbox, FundsIndia, MyUniverse etc offer regular plans only.
Direct plan can be identified through their naming convention. All the direct plans have to mention “Direct” or “Direct Plan” in the their scheme name.
Zerodha Coin Review:
To understand Zerodha Coin more clearly, we need to get to know how direct mutual investment are better choice.
Suppose a fund gives 15% CAGR return and you do a SIP of Rs 10,000 for 25 years though a regular plan with expense charges of 1%, the end corpus would be 2.72 crores.
If you invest the same amount for same duration in direct fund, the end corpus would be rs 3.28 crore. A huge difference of 56 lakhs!
See the difference without doing any additional work from your end. Think of what this amount meant to you and how much effort you need to put in to earn that in your professional life.
But there is a problem, If you want to invest in direct plans, you need to approach each AMCs (if interested in investing in various schemes). And in my opinion it is big head ache. One need to carry out paper work for each AMCs.
To give an example, suppose you had units of 5 mutual funds from different AMCs and if you wish to change your nominee, you need to reach all of them and get the change done.
This is where Zerodha Coin helps in.
You need to open the account once. If you change the nominee at Zerodha coin, it will reflect for all the schemes.
You don’t have to collect and consolidate all the mutual fund holdings for profit/loss statement etc. Everything will be available at one click within Coin.
Zerodha Coin aims to solve all these inconveniences by providing a single order collecting platform.
Zerodha Coin Charges:
When Zerodha launched “Coin” they priced it at Rs 50/month if the investment value of the portfolio is more than Rs 25,000. And for the portfolio value less than 25K, there was no subscription fee. But still smaller investors felt Zerodha Coin charges are high for them.
However, from August 2018 onwards they have waived off the subscription fee for all the cases. That means mutual fund investment in zerodha coin is completely free.
However, there will be a DP charges of Rs 5.5 (from CDSL) + 18% GST on sale/redemption of units for each order.
Read more about it at Zerodha website itself here.
How to do I move/transfer existing Mutual Funds to Zerodha Coin?
If you wish to transfer your existing mutual funds investments to Zerodha Coin, there may be different scenarios. Lets see one by one.
- If your mutual funds are in demat account of another broker:
In this case, ask your current broker to give DIS (Delivery Instruction Slip) slip. In the DIS slip mention the units you wish to transfer, write your Zerodha demat account number and submit to your current stock broker.
The units starts reflecting in your Zerodha demat account within 2-3 days. Then raise a helpdesk request (simply write a mail from your registered email address) to transfer them to coin. They should be doing it at earliest.
- If the holdings are in non-demat form:
In this case you need to convert them to demat form first. After that follow the above procedure.
- If you have invested regular mutual funds scheme:
In this case, it is better to exit the regular mutual funds investments schemes and invest the proceedings through Zerodh Coin.
Zerodha Coin Advantages & Disadvantages:
Now lets see what are the Pros and cons of Zerodha Coin:
Drawbacks of Zerodha Coin:
- There is no advisory from Zerodha : You need to do your own research and zero on which mutual fund scheme to invest.
- You need to have demat account with them first: Hence there will be Annual Maintenance Charges (AMC) related to it.
Benefits of Zerodha Coin:
- Zero commission both during the initial investment and at trail level
- Single platform for all your investments namely equity, currency, commodity and mutual funds.
- One get invest directly in equity too as demat account is also opened along with Coin.
- You can place a buy/redeem order for future: The order is executed whenever the NAV level set by you reached
- Easy for the nominee to carry out death claim proceedings in case of your death. He/she need to roam around each and every AMC houses and repeat the same process.
- Doing SIP with Zerodha Coin is pretty easy, one can start, stop, increase or decrease SIP value without submitting a NACH request.
- Availability of Zerodha Coin App for Android ans iOS users
Zerodha Coin Review: Final Thoughts
Zerodha has disrupted the brokerage industry by offering rock bottom pricing. Now with Zerodha Coin with no charges to subscribe, it may turn out to be major game changer in mutual fund industry as well.
Best part is the end beneficiaries are the investors who used to lost in documentation work and used to pay hefty charges in regular plans.
If you already using Zerodha Coin, please share your review and ratings with us.
