This trick will grow your money much better | Mutual Fund Sahi Hai - Varun Sridhar, Manikaran Singhal EXPLAIN how to get rich faster
Mutual Fund Investment — Direct vs Regular: Mutual fund investments are subject to market risk but there are some mistakes that majority of the investors commit while investing.
Mutual Fund Investment — Direct vs Regular: Mutual fund investments are subject to market risk but there are some mistakes that majority of the investors commit while investing. There are certain money tricks that investors must use to ensure their money grows at a faster and higher rate. One of the top money tricks for mutual fund investors is to choose direct option and not the regular option. According to tax and investment experts, the slogan 'Mutual Fund Sahi Hai' holds well for direct funds instead of regular options. When one goes through a distributor, broker, or bank, it is usually a regular mutual fund. You might not be aware, but mutual fund distributors get paid commissions from money you pay and therefore, if you use the mutual fund calculator you will know that returns can be lesser in Regular option.
Speaking on mutual funds investment, Varun Sridhar, CEO, Paytm Money said, “Fund houses are empowering users with Direct Mutual Funds offerings to accelerate wealth creation. There are two options available through which one can invest in Direct & Regular. When one goes through a distributor, broker, or bank, it is usually a regular mutual fund. As one might not be aware, mutual fund distributors get paid commissions thus returns can be lesser if one opts for the Regular option. Investors can earn around 1 per cent higher return on investment by opting for Direct Funds."
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Sridhar went on to elaborate with an example, if you invest Rs 1 lakh in Aditya Birla Sun Life Mid Cap Fund through Regular route the expense ratio is 2.15 per cent, whereas if you invest through the direct route, the expense ratio is 1.21 per cent. An investor would get the returns of 10.9 per cent if you invest through direct and 9.9 per cent if you invest through regular.
On how direct mutual fund investment benefits an investor SEBI registered tax and investment expert Manikaran Singhal said, "When you invest in mutual funds, you pay commission in regular option which is deducted from your invested amount while in the case of direct mutual fund investment, your invested amount is higher as you need not to pay any commission. In that case, you get more NAVs from your investments in direct mutual funds instead of regular mutual fund investment plans." Singhal said that more NAV means more returns
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