Ajinkya Kulkarni, co-founder of Vint Wealth, has shared a detailed post about his view about the difference between regular schemes or direct schemes of a mutual fund.
You have two options while investing in mutual funds: a regular plan and a direct plan. In a direct plan, the investor deals directly with the fund house, while the investor has to go through a distributor or agent broker, who gets a cut during the process.
Kulkarni gives the example of Axis Bluechip Fund. The expense ratio for the Direct plan is 0.55% while for the Regular plan it is 1.64%. Annual additional payment of 1.09% has a direct impact on the returns you get Investment, And, the difference is astonishing. According to Vint Wealth cofounder, if you invested 10 lakhs in Axis MF Bluechip Fund in 2013, you will become 10 lakhs 36.7 lakh in a regular plan and 50.2 lakh in the direct scheme.
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Kulkarni said, “I am not discounting the services provided by the agents, but unless you have taken the help of an agent to choose your fund, there is no point in paying an additional 1.09%. “
According to Kulkarni, if you invest through the bank’s mobile app, it is possible that you have chosen the regular plan. Most bank apps only offer regular money. If you are financially savvy, you must know which fund to choose and do enough research to support your decision to know that choosing a direct fund is ideal.
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However, Kulkarni cautions that taking money without proper research and knowledge will do you more harm than good. “So if one is unsure they should definitely seek the advice of an agent,” he wrote as a reply that not everyone is able to choose investments, stick to them for ten years and the duration of so-called five-star funds. Be patient to endure. poor performance. The user wrote that a skilled agent would use this to protect the fee disparity.
“Check whether you have chosen Regular or Direct plan. And unless you need the help of an agent, invest in mutual funds directly. It will save you a lot of money in the long run,” he ended his LinkedIn post by saying.
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