How To Invest In Direct Mutual Funds

Well, investing in a mutual fund there are various aspects to be taken into consideration,
but while investing in a mutual fund there is always an advisor in the process but the main task is to
” How To Invest In Direct Mutual FundS ” so let us understand the concept of investing in a direct mutual fund.

Mutual Fund

A mutual fund is an investment tool wherein the funds are collected from the pool of investors and is being invested
in a various diversified portfolio which is overlooked by a professional mutual fund advisor,
Advisor invests in various resources and provides you a specific rate of return.

Well, Mutual fund Advisor levies a charge on you for the services provided by him,
the charges charged from the advisor varies from advisor to advisor because the market
hold and his goodwill in the market is taken into consideration.

The charge paid to the advisor is an Annual Maintains Fees it is also known as Expense Ratio,
most of the time this expense ratio is up to 1%. However, the 1% charge may not sound that higher,
but this 1% will make a huge difference in the long run.

There are 2 types of Mutual Fund plans:

• Regular Mutual Fund Plan
• Direct Mutual Fund Plan

Let’s understand what are those and what makes them different from each other,

Regular Mutual Fund Plan:

It is a Mutual Fund wherein you hire a take the assistance of Mutual Fund Advisor who will collect an annual
maintains charges, the charges are predefined are agreed into the contract.
you provide the POA (Power Of Attorney) to the advisor to invest on your behalf.

Direct Mutual Fund Plan:

It is Plan where an investor can directly invest in a company with the advisor,
Wherein you don’t have to pay any Expense ratio to the agent or advisor,
you can earn a higher return compared to the Regular Mutual Fund Plan.

How to Invest In Direct Mutual Funds?

Investing in a direct mutual fund is an easy task,
well if you are an investor already all you have to do is convert your regular plan into the direct plan.
but if you are new to the investment you should select the plan before investing.
or you can even do it Online there are various online platforms for instance ETMONEY.COM,
wherein you can log in and create and even alter the existing plans as well.

Let us understand with an example how is Direct investment Plan different from a Regular Investment Plan.

For EX: Ramesh invest the Mutual Fun with the SIP of 7200 rs in a Regular Mutual Fund Plan,
for the tenure of 25 years, the amount paid by you will sum up to 21,60,000.
With a 12% investest rate.
In a regular mutual fund plan, the amount will sum up to 1.20 crores,
but the same investment in a direct mutual fund plan will yield you up to 1.45 crores.
Well, there you have it a difference of 25 lakh rupees by just 1% difference of expense ratio.