Regular Mutual Fund vs Direct Mutual Fund

Regular Mutual fund Schemes are the ones when you invest in a mutual fund through a  distributor. And the asset management company charges a  commission which is then taken from the investor and paid to distributor. This is completely leggal and done in  a concealed manner. The fees is in the rainge of 1-1.5 5 pa and added to the nav on a  daily basis. This is apart from the Expense ratio which AMc charges to meet the expenses of running the fund. So in total it might comne to say 2 %. This is the case when you buy the fund from any banks, agents, financial institutions.

However AMCs directly sell the mutual funds through  Direct schemes where you can particiapate by avoiding it. One can save the distributor commiison that way. So you get to invest in populatr funds for expense raio, as little as 0.7 %

Following table gives the expense ratio for some popular funds. The average difference is around 1.07 %. Now lets see whats this 'meagre' 1.07% does to your corpus in the long run.

You see from the table below that  the corpus of 10 lakhs would have grown 184 crores in case of regular scheme in 40 years whereas in direct scheme it would have grown 267 crores.
a difference of whopping Rs 8.3 Crores

7. Cry with someone. It’s more healing than crying alone.

The above  life lesson is  from the widely known, highly popular column by Regina Brett. “45 lessons, written by a 90 year old”