Direct mutual fund vs Regular mutual fund

Hope you guys doing well and finally searching so many things you have decided to invest in mutual fund . Still you might encounter so many question while investing in mutual fund . The first question coming to mind is should I invest in direct plan or regular plan? Second question you might face which is better specially When I am investing through SIP?

Direct plan: A Direct plan is what you buy directly from the mutual fund company (usually from their own website).
Regular Plan : A Regular plan is what you buy through an adviser, broker or distributor. On the other hand you can say intermediary.In regular plan mutual fund company pays commission to the intermediary.

After noticing both the definition again you can think mutual fund company pays commission to the intermediary, that’s mean you will get less return in regular plan. Yes you are correct the return you make on direct plan is higher than regular plan by approximately 0.5% in case equity funds and 0.2% in case of debt funds. Now the burning question is which one is better? If we are getting higher returns on direct plan that’s better . However, the comparison is not that simple what we are thinking. Then where is the difference?
In a normal day whenever we are felling sick we go to doctor for their professional advice instead of medicine shop. Similar way whether you should pay that fee or not depends on the investor’s own capability and the quality service you got.

You will get below help whenever you invest through intermediary:

1.In the market so funds are present. So it is quite tough for someone to select good funds, intermediary will help you to choose fund. The choice of a good fund vs a poor fund could lead to a difference of as much as 4-5% in return over time. As said earlier you might get 0.5% extra, but if you choose wrong or poor fund you will be loosing 5% compare to regular plan.
2. By reviewing your portfolio intermediary might help you to re-balance. This could easily be worth another 1-2% over time. Suppose the selected fund after 4-years might not give you the expected return which you want. In that case intermediary will help you to switch fund.
3.Additional services like facilitating your investment, tracking your portfolio, and account changes: This is not simply a question of saving time and effort. Most people simply won’t do it and neglect their portfolios resulting in poor returns and, sometimes, even lost money because they don’t have a record of their investments.

So, if you are a diligent investor with deep knowledge, meaning that you can pick and track your own mutual funds, then the direct plan is better. The adviser provides no extra value and does not deserve their fee. For most people, however, relying on someone’s recommendation is the only option.

To invest in Mutual fund please dial in below number or drop me a mail :
Jayati Datta Gupta

Cell number: (+91)-9051732839, (+91)-8013774767(Whatsapp)


You May Also Like

One thought on “Direct mutual fund vs Regular mutual fund

Leave a Reply

Your email address will not be published. Required fields are marked *