How to use Paytm Money
Paytm Money is billed as the App that will bring mutual fund investing to the masses. India’s total population of mutual fund investors is currently (September 2018) around 2 crore. This is just 1.3% of the total population of 125 crore leaving Paytm with a huge market. The Paytm wallet currently has about 10 crore users, so just getting its existing customers on board can multiply the mutual fund investor base 5 times over. Many of these, if not the overwhelming majority will be first time investors in mutual funds and it is very important that they understand the risks involved. A huge part of the Paytm Money appeal is that only offers direct (commission free) mutual funds.
Using Paytm Money is an incredibly smooth and quick process. My journey was even quicker because my mutual fund KYC (Know your Customer) is already complete and I have an Aadhar Card linked to my bank account.
Initial Process of registering on Paytm Money
The app registered me, one day after I downloaded it. Immediately after download, it asked permission to pull my basic details from my Paytm wallet and automatically did so. It then asked me to input my PAN number so that it could check if my KYC was done. Within one day, it had made the check and finished its back-end process and allowed me to enter the app, explore funds and invest.
It may take you more time if you do not have the Paytm Wallet and/or do not have your Mutual Fund KYC completed.
Note that you do not need to do your KYC with Paytm (Paytm Wallet) in order to invest in Paytm Money. You can have a ‘KYC not done’ with Paytm Wallet but still invest through Paytm Money.
Registering a bank mandate for SIPs through Paytm Money
I even set finished the procedure for a one-time bank mandate up to Rs 1 lakh within a matter of 5 mins. The Paytm Money App took me to the Aadhar website and asked me to generate a Virtual ID. I had to enter the Virtual ID in the bank mandate form, then enter a one-time password (OTP)sent to my mobile number and voila! The mandate has been filled up.
Selecting a mutual fund on Paytm Money
Get Neil Borate’s stories in your inbox
Join Medium for free to get updates from this writer.
So far so good. However note that selecting a fund on Paytm Money is not quite as straightforward. Paytm Money provides certain lists to help you select funds. They are NOT helpful and can push you into the wrong funds.
- One of them is ‘Top Rated Funds’ which simply adds up the ratings of the three ratings agencies — Value Research, Morningstar and Crisil and ranks funds according to the total. It then ranks funds according to returns. However the list does not differentiate between fund categories. This pushes (highly risky) small cap funds to the top of the list of ‘Top Rated Funds.’ Please be very careful while using this list. Understanding the fund category — large cap, multicap, sector and so on is as important. Please use an independent source of research like Value Research Online (valueresearchonline.com) while doing so.
- Another list provided is ‘Top Rated Fund Managers.’ Once again, this list pays no heed to fund categories and ends up pushing managers of highly risky sector funds to the top. Please do not use this list to select funds. Pick a category first — like equity multicap or hybrid balanced advantage and invest accordingly. You can get more in depth fund research at Value Research Online (valueresearchonline.com).
3. They have a third list called investment ideas. This is a curated list which seems to be a good selection of funds, according to investment theme. However they do not say how these lists are made. The research process is wholly opaque.
4. You can also select funds on the basis of AMC, or fund category such as equity funds or balanced funds. The lists in these categories are based on trailing returns in different time periods. Once again there is no detailed research on volatility or performance against benchmarks. Be very careful while using them to pick funds.
How to register a bank mandate/SIP mandate with Paytm Money
This is an incredibly simple and quick process. In the old days, you had to fill up paper forms for registering SIP mandates with banks. You would submit the forms to the distributor/agent or web portal which would forward them to the concerned bank. This is no longer required. You can simply fill in a bank mandate request online with Paytm Money (this is also available with other web portals). You only have to enter your bank account number and IFSC code. The system authenticates you by sending an OTP (One-Time Password) to your mobile number registered on the Aadhar Database.
It takes just 3–7 working days to register a SIP with Paytm Money. In the mandate you also specify a ‘Max Transaction Limit.’ This is simply the upper limit for the SIP in question and your actual SIP can be much lower than this amount. The same bank mandate can also be used to debit lumpsum amounts automatically from your bank account.
Conclusion
Let me be very clear — Paytm Money is a beautiful, smooth, easy-to-use App. It was done with a great deal of thought and works incredibly smoothly. However it is not very useful in replacing a human advisor, just yet. Use it only if you really understand mutual fund or with assistance from someone who does.
