Want to create wealth in long term ? Invest in direct mutual funds

A Direct plan is what you buy directly from the mutual fund company (usually from their own website), whereas a Regular plan is what you buy through an advisor, broker or distributor (intermediary). In a regular plan, the mutual fund company pays commission to the intermediary, cutting down your total profits in return.

Want to create wealth in long term ? Invest in direct mutual funds

The low-cost direct mutual funds are slowly gaining popularity, especially among HNIs and corporate investors.

However, many small investors are still stuck with the high cost regular plans. This is largely due to lack of awareness.

Even those who know that direct plans are cheaper than regular plans often do not switch to the former as they are unaware of the extent to which a direct plan can increase their overall return.

So why is direct mutual fund better than regular mutual fund?

1% Higher return means a much bigger returns
Due to compounding, the returns built via products with lower costs will be significantly higher over longer periods

How can you purchase the funds ?
Once you identify suitable direct mutual fund schemes—by yourself or with the help of RIAs—buying them is the next big task on hand. Thanks to structural changes in the industry, this has become much easier now.
Websites maintained by the respective fund houses are your first option. The key advantage here is that the transactions on these portals are entirely free. It’s also an easy option.

is it easier to start investing in direct mutual funds?

The comfort of dealing directly with the fund house is another reason why investors prefer using the fund portals. The money transactions happen through one gateway and you don’t want to involve others. The only pain here is that you will need to remember several user name–password combinations. This won’t be much of a trouble, if you have a mutual fund portfolio with just a few schemes.

Mutual Fund Utility(MFU)

This option works for investors who prefer a single user name and password. Since this platform has been developed by the mutual fund industry, it is also free transaction charges. Besides investors, MFU also allows RIAs to register, so they can also help investors execute their orders. Over the years, the number of direct investors transacting via MFU has gone up significantly and direct plans contribute around 35% of its transactions now.

The drawback of MFU is that all mutual funds are still not a part of it. Fund houses such as Mirae Asset MF, LIC MF, Baroda Pioneer MF, among others, are still outside its ambit. But this may not make a big difference to most investors. Funds managing 96% of the industry’s AUM are already part of the MFU platform and we carry out transactions worth Rs 15,000 crore daily .

Want to start direct mutual fund investment , but dont know where to go ?

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