After investing in mutual funds for about 3 years, i have learned the difference between direct plan and regular plan quite later and writing this blog so you can make an informed decision while investing your hard earned money.
Direct Plans - As per the SEBI guidance, 2013 onwards all AMCs have started offering direct mutual funds to customers where no intermediary is involved and customer can save some commission which could range from 0.5% to 1%.
Regular Plans - These are the mutual funds which are usually sold by your agent/third party sellers and they get commission from AMCs which at the end of they day gets paid from your holdings.
Apart from the commission part there is no difference between the both. Assets held by the AMC for both the plans will be same and same fund manager will be managing both the plans.
Advocates of regular plans have argued that investors can make wrong decision in selecting the funds which can lead to losses later on which is true. There is some time which investors will have to spend on their own to select funds or they can choose regular plan offered by MF distribtor.
There are financial planners available who can advise you on direct plans as well but they may charge for their services since there is no commission to earn later on.
Let me know if you have any question. Happy Investing !!!
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