Do you search for online restaurants that offer home delivery at zero charges? Even Direct Plans of Mutual Funds charge 0% commissions.
Every mutual fund has 2 variants: Direct and Regular Plans:
- In Regular Plans, mutual fund intermediaries charge 0.5-1.5% as commissions or distribution fee.
- On the other hand, Direct Plans eliminates the brokers/intermediaries and thus charge zero commissions. Instead, this is reflected back in your portfolio in the form of 0.5-1.5% additional returns.
Let’s have a look at the returns from a one-time lump sum investment of Rs. 2 lakhs in Direct and Regular plans for 20 years:
Assuming a Regular plan of a specific mutual fund with ~15% returns, we will get upto 9.6 lakhs extra returns in the Direct Plans of the same fund (thanks to additional 0.5-1.5% returns combined with compounding effects in the long-term).
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Check out the funds recommended by Smart Recommendation Engine:
