Why invest in Direct mutual funds than Regular mutual funds?

By | February 5, 2019

Direct Mutual funds plan are those where the investor invest directly into the Mutual fund schemes without the help of any broker/distributor.

Your corpus will be 35% more in 20 years if invested in direct mutual funds rather than regular mutual funds.

It is a trend that around 90% of investor invest their savings in regular Mutual funds through their broker as compared to Direct Mutual funds.

The benefit you will achieve in Investing in Direct plans as compared to Regular plans is phenomenal if you are long time investor.

Highlighted below is the saving you can achieve in Direct Mutual Funds as compared to Regular.

(Assumption- 12% Return on investments and a Total Expenses Ratio of 1.0% for Direct Plans and 2.5% for Regular Plans for corpus of Rs 1 Lakh)

 Direct Mutual Funds

Image Courtesy-Kuvera

The saving benefit you get in Direct plans is because of lower expense Ratio  (generally 0.5 to 1%) when compared to Regular Mutual fund plans(generally 2-2.5%).

When investing in Direct Mutual funds you ought to be very much aware of the plan you would need to opt as there would be no guidance provided by brokers as in the case of regular mutual funds.

For that you can consider the ranking of various mutual funds available on sites like moneycontrol,Value research etc.

There are lot of platforms which gives an option to invest Direct Mutual funds like Zerodha, Kuvera, MF utility, Cams to name few. Also you have option to invest online by logging directly into various AMC Mutual fund websites.

In a nutshell, if able to identify right mutual fund scheme and invest in Direct plans, you could accomplish a superior degree of profitability in a long run on your investments.

 

 

 

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