Why should you always pick direct mutual funds over regular mutual funds?
Let’s say you have ₹10 lakhs to invest. Since you don’t have enough knowledge or time, you contact a sales guy - distributor.
He helps you find the best regular mutual fund and helps you invest your money. In exchange, he doesn’t charge you because he receives a commission from the mutual fund company, AMC.
The regular mutual fund’s expense ratio is 1.5%. Assuming the fund provides 12% returns for the next 10 years. After deducting the expense, your ₹10 lakhs investment has grown to ~₹27.1 lakhs.
But what if you spent some time educating yourself and investing in a direct fund? In 10 years, your ₹10 lakhs investment will grow to ~₹28.4 lakhs!!! Amazing right?
The difference in expense ratio will cost you ₹1.3 lakhs for an investment of ₹10 lakhs. If you invest more and for a longer time, this difference grows. Can you afford to lose that much in commissions? Or was the sales guy's advice worth lakhs of rupees?
Think about it. Hope you understand why we always recommend investing in direct funds. You shouldn’t be paying lakhs in commission, whereas that money can do a lot more good for you and your family.
Don’t forget to subscribe and share it with your friends if you find it useful.
#shorts #mutualfunds #mutualfundsahihai #mfd #personalfinancetips #mutualfundforbeginners