In 2013, the Securities and Exchange Board of India (SEBI) directed the AMCs to launch the Direct plans (i.e. zero commission plans) for all their current mutual fund schemes. Along these lines, now there are two plans for any mutual fund:
a. Regular Plan
b. Direct Plan
In the regular arrangement, every year you pay a concealed charge of 1% - 2% as a commission to the agents/brokers/dealers. These commissions are paid from your investments and in this way lessening your profits. Direct plans, then again,do not have any such commissions and along these lines offer higher returns.
Platforms like Orowealth.com enable easy investments in direct plans of mutual funds. They also offer personalized advisory and guidance as to which funds/schemes to invest in based on your goals and risk profiling.
3 Reasons Why Investing in Direct Mutual Funds makes Sense
1. Higher Returns Due to Zero Commissions: Regular plans of Mutual funds eat up 1%-2% of your investments in the form of commissions every year. To avoid this loss of wealth, it is a wiser option to invest in Direct plans of mutual funds which don't have any commission. Let us understand it better with an example:
Suppose you invest INR 10,000 p.m. in a regular plan mutual fund with a growth rate of 12% and an expense ratio of 2%. It will give a return of 10% p.a.
If you let the investment grow in the same funds for 20 years, there will be a difference in earnings of INR 10,62,692 - which is huge when compared to your investment amount ! And this entire amount goes to your brokers or agents.
2. There is no Bias in Direct Mutual Funds: Regular mutual fund schemes have expenses and commissions. Sometimes the agents or brokers tend to sell plans with higher expense ratios to the customer without considering their actual financial needs.
There is no such bias in direct mutual funds. The investors can choose any fund without any external pressure and as per their financial objectives, risk tolerance, and investment horizon. A transparent platform like Orowealth.com can help investors in such unbiased investments.
3. No Hassle and Quicker Service Time: Investing in direct mutual funds has become very easy and hassle-free. With platforms like Orowealth, the investors can manage all their investments on a single platform, switch to direct plans, and monitor all their investments. In addition to this, investing in direct plans consumes less time than regular ones.
Want advice on which Funds to Invest?
There is a typical confusion in masses about the fact that Direct mutual fund plans don't offer any sort of financial advisory; another general myth is that these plans are just for the individuals who are specialists in money markets.Orowealth.com was developed to address this need. It disposes of any bias as it offers you Direct mutual fund plans and furthermore offers customized financial advisory to assist you to make more from your investments.
So would you explore investing in Direct Plans of Mutual funds now?