Q: Should I invest via a direct or regular mutual fund SIP? Are there any websites through which I can invest directly in funds?

What is a direct or regular mutual fund?

Direct funds are generally just another version of the regular mutual funds. The only difference between them is that regular mutual funds have a distribution commission while direct mutual funds do not. A small fee is deducted regularly by the agent/broker, from investor’s returns in regular mutual funds. If that’s something new you have learned, well then keep reading further!

Regular v/s Direct funds

  • Returns: Direct mutual funds provide higher returns than regular funds as commissions are eliminated.
  • Expense Ratio: This is the amount deducted for administrative expenses from investor’s returns. The Regular fund has a higher expense ratio.

So, the next time you’re thinking of investing in mutual funds, you can think about taking up a direct fund. It might involve some preliminary work, but it will bear great dividends in the long-term and save you a lot of potential headaches.

Verdict?

While the general populace might be content with commission-based agents shouldering their investments, it might be helpful to take a more active approach to your long-term financial goals. Learn a bit about the AMC you want to invest in and compare their funds or take up the services offered by a one-time fee advisor that helps you build your own portfolio or invest in a pre-made portfolio based on your needs.

Happy investing!

Disclaimer: All of the information I share here is strictly to educate my blog readers. Please do not consider any advice as a recommendation. Read the disclaimer.