Buying Mutual Funds Online ~ No Broker Needed

by Jessica Serol.
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Before you invest in a mutual fund, read the fund’s prospectus so that you understand exactly what you’re investing in. Next, fill out the online account application form for the mutual fund company. At companies like Vanguard (www.vanguard.com), depending on the type of type of account you desire, you can open an account online or print the application and mail it to the mutual fund firm.

For specific details about opening an account, contact the fund company or broker. In general, you need to complete the following steps to open a mutual fund account online or offline:

1. Provide some basic information (your name, mailing address, e-mail address, and so on — including your Social Security number).

2. Mark what type of account you want: individual, joint, or trust.

3. Indicate your fund selections and state how much you are investing.

4. Indicate the status of your citizenship (U.S. citizen, resident alien, or nonresident alien). If you’re not a U.S. citizen, you have to include a W-8BEN form.

A W-8 certificate is required of all non–U.S. citizen account holders for nonresident tax reporting purposes in order to claim exemption from backup withholding on interest, dividends, and gross proceeds in the account. To request a W-8BEN, see the IRS Web site at www.irs.gov/ pub/irs-pdf/fw8ben.pdf.

5. Mark whether you want check-writing privileges.

6. Indicate whether you want direct or automatic deposits (when you sell or if you receive a dividend) into a checking account or if you want a paper check.

7. Print, sign, and send your completed account application if applying by mail. Don’t forget to include your check, made payable to the mutual fund.

8. Provide bank information to make electronic transfers if applying online.

When you complete the online application, you’re asked to sign the online form using a secure code as your signature.

If everything goes as planned, the mutual fund company sends (to your mailing address) a confirmation number, along with your new account number. Table 7-4 includes a brief listing of companies that allow you to purchase mutual funds without a broker. All you have to do is contact the company directly. Each company listed bellow allows online transactions, and provides online applications and prospectuses.

American Century Investments www.americancentury.com

Baron Funds www.baronfunds.com

Fidelity Investments www.fidelity.com

Firsthand Funds www.firsthandfunds.com

Fremont Mutual Funds www.fremontfunds.com

Kelmoore Strategy Funds www.kelmoore.com

Oak Associates www.oakfunds.com

Royce Funds www.roycefunds.com

RS Investments www.rsinvestments.com

T. Rowe Price Associates, Inc. www.troweprice.com

TIAA-CREF Mutual Funds www.tiaacref.org

The Vanguard Group www.vanguard.com

William Blair Funds www.wmblairfunds.com

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