In the year 2012, SEBI directed mutual funds/Asset Management companies (AMCs) to provide a separate plan to investors for direct investments in mutual fund schemes. In this post, we discuss what regular and direct plans are all about and the difference between the two types of plans. Finally, we assess the impact of different cost structures of the two types of plans on the returns offered by the funds. We also discuss the procedure to invest in direct plans of mutual funds and impact of taxation on shifting from regular to direct plans.
What are regular and direct plans of mutual funds?
You can invest in a mutual fund scheme in two ways: directly with the fund house (direct plans) or through a mutual fund distributor (regular plans).
Regular plans are the norm. That is how you have been used to investing in mutual funds. Under regular plans, you invest in the mutual fund through a distributor or a channel partner. Investment from your regular distributor or online fund investment platforms such as ICICIDirect falls under regular plans. Expectedly, since an intermediary is facilitating a transaction, fund house pays them an upfront and a trailing commission. The actual commission paid can vary across schemes and even across distributors. Though the mutual fund does not directly charge you the commission, it gets paid from the fund only and thus it affects your returns indirectly.
Post SEBI directive, mutual fund houses started offering direct plans. Under the direct plans, you approach the mutual fund house directly to invest. Since there is no distributor involved, no commission is paid. Thus, the expense ratio is lower for direct plans as compared to regular plans.
In simple terms, expense ratio is a measure of cost that you pay to the fund house for managing your money. Expense ratio covers everything from fund management fees, operational and marketing expenses to distribution expenses. Keeping everything else same, a lower expense ratio means lower costs and hence better returns. Since everything else (portfolio, stock holdings etc) is exactly same in direct plans and regular plans, direct plans offer better returns than regular plans.
This is the reason NAV for direct plan for the scheme is higher than the NAV for a regular plan. For example, as on April 10, 2015, for HDFC Balanced Fund, NAV for direct plan was Rs. 112.57 while the NAV for regular plan was Rs. 110.58. Do not make the mistake of thinking that the direct plans are expensive. It is exactly the opposite. Both plans had started at the same level after SEBI directive. However, owing to better returns, NAV of a direct plan has nudged ahead. The difference will only widen since the direct plans offer better returns.
What is the impact on returns?
Though we have established that the direct plans offer better returns, we have not yet discussed the quantum of impact on returns. For the purpose of analysis, we consider top 10 large cap equity funds (returns over 5 year period). Funds, for which the expense ratio for the direct plans was not available on ValueResearch, have been excluded from the exercise. Index funds have also not been considered for the exercise. We took a simple average of expense ratio of direct and regular plans for such 10 plans. The average expense ratio for regular plans was 2.48% while for the direct plans; the average expense ratio was 1.84%. The difference is 0.64% per annum.
Let’s see the impact on absolute returns through the help of an example. We have assumed two different SIP amounts (Rs 10,000 and Rs 15,000), two tenors (10 and 15 years) and two levels of returns (8% and 12%). If return mentioned is 12%, we have taken return for regular plan at 12% and for direct plan at 12.64%.
You can see the power of compounding in full force. The difference between the absolute returns grows with the increase in SIP tenor. This makes the case for investing in direct plans of mutual funds so much stronger. In no way, do we mean that the difference in returns between the direct and regular plans will be 0.64% per annum. We have used the figure for illustration purposes.
PersonalFinancePlan Take:
The difference in accumulated wealth for the direct and regular plans is too high to ignore. To invest in direct plans of mutual funds, you just need to visit the nearest AMC/mutual fund office, fill a form and submit requisite documents (cheque, copy of PAN card, address proof etc). During your visit, you can request for online login credentials too. Subsequently, you can simply transact online. Most fund houses provide easy online interfaces for redemption of units and creation and cancellation of SIPs or even invest in any other fund from the same AMC. The only drawback is that, in case you want to invest in a fund offered by an AMC that you have not invested with before, you will have to visit nearest office of that AMC once to complete the documentation.
You can also shift your existing mutual fund investments from regular to direct plans. However, such transfer shall be considered redemption (from regular plan) and a fresh investment (into direct plan). Hence, capital gains tax and exit load implications may arise. Additionally, for investments which have a lock-in period (such as tax saving mutual funds or ELSS), your investments into direct plans will have a fresh lock-in of 3 years. So, anyone planning to switch from a regular plan to a direct plan should keep these elements in mind.
Considering all the points discussed above, we recommend that any fresh investments that you make in the mutual funds shall be through direct plans. For the existing investments, you may have to consider taxation, exit load and lock-in period before you make the decision to switch.
Update: December 28, 2015:
Contrary to what is mentioned above, it is not necessary to visit the nearest AMC office if you want to invest in direct plans of mutual funds. If you are KYC compliant, you can go to respective websites of mutual fund houses and start investing in direct plans. Go through the following post for more on this.
Invest online in Direct plans of Mutual Fund Schemes
Additional Read
Should you switch from Regular plan to Direct plans of Mutual Fund Schemes?
Common Doubts about Direct plans to Mutual Fund Schemes
Deepesh is a fee-only financial planner and Founder, PersonalFinancePlan
264 thoughts on “Why you should invest in Direct Plans of Mutual Funds?”
Hi, I have started a SIP in Axis Long Term Equity Fund(ELSS) on 7th May 2015. I created the folio with the help of a person in Axis Bank. He instead of creating the folio in direct plan created with regular plan and mentioned distributor name as Axis Bank. After pointing his attention towards this he said you can switch to direct plan later any time but after talking with Axis MF toll free they said you cant switch to direct plan since this mf has lock-in period of 3 years. My question is that can I switch from Axis Long Term Equity Fund(ELSS)regular plan to Axis Long Term Equity Fund(ELSS)direct plan? and what will be the charges?
Thanks
Hi Anil,
Axis MF is correct. Switch from regular to direct plan is treated as redemption from regular plan and investment in direct plan. Since there is lock-in of 3 years in ELSS, you can liquidate your investment in regular plan before 3 years.
I would suggest that you cancel your existing SIP in regular plan. Visit the nearest Axis Mutual Fund office and apply for SIP in direct plan from there. In case you go through Axis Bank or any other distributor or online platform, you will end up investing in regular plans only. So, you need to approach Axis MF directly.
The process is simple. You just need to carry a few documents, photographs and a cheque and it will be done. You can even apply for web-login details and do all future transactions online subsequently. Remember to write direct plan in the MF scheme name.
If you had invested in regular plan of a normal mutual fund (and not ELSS), switching from regular plan to direct plan would have entailed exit load (if applicable and capital gains tax, if any.
Let me know if you need to know anything else.
Are there separate form for Direct MF plan and Regular plan; or I have to write with a pen by myself on the form for direct plan.
The form is same. Just write Direct in front of the scheme name. e.g. “HDFC Balanced Fund – Direct”.
This will do.
सर मैं mutul फण्ड में investmant करना चाहता हूँ इस के लिए मुझे क्या करना पड़ेगा कृपया गाइड करे मैं इस क्षेत्र में नया हूँ
आप अपने शहर में किसी अच्छे MutualFund advisor से मिलिए. वह आपका निर्देशन करेंगे.
How do I invest in Direct plans of various MFs all at one single place?
Like Axis, Icici Pru, GS direct, all at one place?
You can invest through MF Utility. It is an initiative by AMFI, Association of mutual funds of India. You can go through their website at http://www.mfuindia.com/. You can go to one of their POS with all the necessary documents, get CAN issued and invest in direct plans of various mutual funds from a single place. You can also register for SIPs.
The only problem is that the online interface has not yet been made available for the retail investors till now. This is expected to be made available by the end of the year. You may go through the following link http://www.personalfinanceplan.in/mutual-funds/mf-utility-platform-is-a-win-win-for-investors/
Hi Deepesh, thanks a lot for the valuable tips. Is the online interface for retail investor is up? In that case for the first time do we need to visit MFU POS for the first time?
Yes, the online interface is up. Now you can invest in direct plans of MF schemes through MF Utility.
On MF Utility website, it is mentioned that you can send filled in forms to their Mumbai office. I am not sure how well it works.
Will be better if you visit MFU POS and submit forms for CAN and PayEezz.
Do fill in PayEezz form if you want to do SIP transactions through MFUtility.
Hi Deepesh thanks a lot for the reply.
One more question-> Once I submit all the forms and relevant docs (for CAN and PayEezz) will I be able to buy MF online or do I need to go to the POS each time I plan to buy a new MF?
Sudhansu,
You will be able to do transactions online.
Hi Deepesh,
Thanks for this useful and precise information. Does the MF Utility service charge any annual or maintenance fees or any transaction fees while purchasing or redeeming the NAV unit?
Hi Amit,
You are welcome.
At the moment, MFUtility is completely free for investors.
There are no charge for purchase, redemption, creating SIPs, cancelling SIPs etc.
Please do share the post with friends and family.
Thanks fir confirmation
I have just started investing in MF through SIP. I’m using an online service provider (start-a-sip). I have subscribed for regular plans. I believe I should be able to change the schemes to direct plans. Any comments / suggestions on when I can change them?
Hi Manohar,
Yes you can shift. However, switch from regular to direct plan is equivalent to redemption from a regular plan and investment into direct plan.So, if you have invested for less than a year, both exit load and short term capital gains tax implication may arise.
What you can do is that you can cancel your existing SIP and start a new SIP (direct plan) in the same fund by going to the nearest MF office or MF Utility office. Once your current holdings turn an year old, you can sell those units and purchase units in direct plan.
Let me know if you need to know anything else.
Hi Deepesh,
I am new to SIP. I have a small doubt in this. If the NAV value is higher in direct plan we will end up in lesser units allocated. So in future if NAV per unit increases we will end up in lesser profit as we have lesser units in direct plan than in regular plan.
eg:
If we are investing Rs.10000:
Direct – NAV is 112.57 – So Units allocated is 88.83
Regular – NAV is 110.58 – So Units allocated is 90.53
So how will we be benefited in Direct plan. Can you explain in easy terms.
Hi Vasanth,
Lets take an example. Suppose NAV for direct plan is 110 and for regular plan is 100.
You invest Rs 11,000 in both. You will 100 units of direct plan and 110 units of regular plan.
Lets assume regular plan returns 10% and direct plan return 11%.
NAV of direct plan will grow to Rs 122.1 while NAV will grow to Rs 110.
Total value of investment under direct plan= 100*122.1 = 12,210
Total value of investment under regular plan = 110*110= 12,100
You can see the difference. This is because return is higher in direct plans. So, if you start with same value of investment, you will make more money in direct plan.
In the example,the gap between NAV of direct and regular plan was 10. It grew to 12.1 after one year.
So, even though you get lesser number of units under direct plan, your overall investment value grows faster.
A few years back, direct plans and regular plans would have started at same NAV. The difference has kept on growing and will keep on growing. Hope this answers your query.
Hi,
I have been investing in Axis Long Term Equity SIP regular plan for almost two years. Will there be any charges if I convert my mutual fund from regular plan to direct plan after completion of 3 years lockin period
There will be no charges. Switch from regular plan to direct plan is considered redemption from regular plan and investment in direct plan.
Since, in any case, you cannot liquidate ELSS holding before three years, there will no exit load applicable.
However, when you invest the money in direct plans, units purchased will be subject to a fresh lock-in of 3 years.
An additional point to note: Every installment of SIP is subject to a lock-in of 3 years. So, units bought through your installment in August 2014 can be sold only in September 2017. Units bought through SIP installment in August 2015 can be sold in September 2018.
Thank you so much.. This clarifies..
Hello Sir,
i want to know is there any benefit if anyone is investing in regular plan and their fund is managed by their fund manager ? Actually i am just new to the SIP and i am unaware of the most of the terms and fund managing criteria and i want to invest monthly and rest is leaving upon MF company i am investing into. What are the facilities does regular plans gives over the direct one ?
Hi Navam,
Under direct plans of mutual funds, you only save on distribution costs. There is no other difference. Portfolio for regular and direct plans is same and is managed by the same fund manager. Under both direct and regular plans, you trust your money to the MF company or the fund manager and they manage the money on your behalf. Direct plan does not mean you will have to take investment decisions. Only fund manager will take the decisions.
Take an analogy. You have a bottle of soft drink. You can drink directly from the bottle or use a straw to sip the drink. Under both the cases, you are consuming the same drink. Suppose you have to pay for the straw.
So, you can invest directly with the fund (direct plans) and invest through an intermediary (regular plan).
Since an intermediary is providing a service, he deserves to be paid. You don’t pay him directly but the MF does on your behalf. At the end, money goes from your pocket only (though you don’t have to write a cheque).
You can have SIPs in both direct and regular plans.
Regular plans are offered by distributors or many online channels such as ICICIDirect, FundsIndia etc. Local MF distributors can offer you investment advice and help you in selecting good MFs. They can help you stick to investment discipline too. There are many good distributors around. Online channels provide you the ease of transaction and an easily available consolidated view of your portfolio.The flip side is that your returns take a small hit due to payment of commissions.
Direct plans are especially suited for do-it-yourself investors who can research funds on their own. Such investors can enhance returns by going for direct plans.
In case you can research MFs on your own, go for direct plans.
In case you can’t, contact a SEBI registered investment adviser, pay him/her a small fee for recommendations and invest in direct plans.
If you can’t do that too, invest in regular plans through distributors. You will get lower returns but at least you will get started.
According to me, you must invest in mutual funds and Direct plans of MF scheme are a cost efficient way of investing.
Sir, thanks for your answer. Based on your answer i have another thing to ask that suppose now i choose a direct plan and after sometime i notice that the fund is not performing well. So in such a case will there be any representative available from mutual fund company to suggest me if i should stick to the same plan or should switch to another plan ?
AMCs won’t guide you. And ti is better that they don’t guide you.
As I mentioned in my previous reply, if you are not comfortable doing research on your own, you can do either of the following:
1. You should talk to a SEBI registered investment adviser and invest in direct plans. They will guide you if you need to switch. In the long run, you will more than make for fees paid in form of higher returns.
2. Invest in a regular plan through distributors. They can guide you too. However, as mentioned in the post, you will have to compromise a bit on returns.
Since you are young, you are advised to take exposure to equity mutual funds. So, you must start investing in mutual funds. The choice between direct and regular plans is secondary. Direct plans are cost effective though.
Can you please suggest me some good SEBI registered investment advisers who are having moderate fees?
Thanks for your valuable support.
I am a SEBI registered investment adviser. You can visit “Our Offerings” section for more details.
I cannot comment on the fees that other registered investment advisers charge.
You can find the complete list of SEBI registered investment advisers on the SEBI website.
http://www.sebi.gov.in/sebiweb/home/detail/26311/new/List-of-Registered-Investment-Advisors
You can get in touch with them and enquire about the fees.
Are these charges annually or one time for mutual fund advise ?
Navam,
Please drop your contact details at support(at)personalfinanceplan.in. I will explain the offerings and pricing in detail.
i mailed two times on the mail id provided by you but did not receive any response yet.
Dear Navam,
I regret the inconvenience caused. I try my best to answer all the queries. I just checked my e-mail. I replied to your mail on Monday, October 6, 2015.
I have forwarded the reply again. Request you to check your Spam section too. If you do not find the answer, you can call me at +91-97024 81592. Alternatively, you can drop your contact number in the e-mail. I will arrange a callback.
please advice for any good equity growth fund for investing 50k.
Alankar,
It is not appropriate to offer advice without doing proper risk profiling. Please drop me an e-mail to take it further.
Hello sir,
I just want to know how to start investment in direct plans.. What my first step should be and so on … Please can you tell step by step
Hi Taqiuddin,
I am happy to know that you have realized the cost efficiency of direct plans.
Once you have finalized the fund, you visit the nearest branch of the particular AMC( mutual fund house). For instance, if you want to invest in HDFC Balanced Fund, visit the nearest branch of HDFC MF. Do not visit HDFC bank branch. HDFC Bank will get you invested only in regular plan. You must visit HDFC MF office. Carry a few photographs, PAN card, address proof and a cheque for initial investment. You must carry original along with the photocopy of the document. You will be required to fill an application. In the form, you can write HDFC Balanced Fund-Direct plan. The office staff will guide you on formalities. Typically it takes 30 minutes to 1 hour to complete to process.
Good luck!!!
Thankyou sir for getting back to me.
I would like to mention that I am a NRI , so is it possibe for me to register through online in AMC , Also what are CAMS and KARVY are they helpful in registering in AMC.
I also got know about common account number CAN by which i can use single login & password for multiple MF’s .
Can you please suggest a suitable way for me to invest. Thank you
If you are KYC compliant and an existing investor, then you can go to the AMC website and log in to make investments online. However, with other AMCs where you are not an existing investor, you will have to do some documentation. You can check the exact documentation with the fund house. Quantum AMC has started doing e-KYC but that is only for resident individuals as of now.
You can go to CAMS and login with your PAN number (and generate password). However, I checked with them a few months back. You can use their portal to invest with AMCs you have already invested before. For investments with new AMCs, they were still working.
CAN is issued by MF Utility. You can use MF Utility to invest in multiple MFs. However, at the moment, you cannot use MF Utility to invest ONLINE in direct plans of mutual funds. You can invest in direct plans in the offline mode. So, this is not an option for you.
I have the option of investing through Fundsindia, which won’t be charging any such transaction fee and will only make money in terms of trail commission paid by AMC. Fundsindia also promises free advisory service. what do u say
You can do that. FundsIndia has an excellent interface. However, you will be investing in regular plans if you invest with FundsIndia. This post was about how direct plans are better than regular plans. In mutual funds investing, the usage of advisory service is overstated and is sometimes used to justify higher costs. You pick up a few good funds (or take professional help) and keep investing in them. Do a review every 12-18 months. It is as simple as that. There is not much to do. Unnecessary and unsolicited investment advice can only confuse you. Please appreciate the conflict of interest in my reply as I provide paid investment advisory services.
Hello,
I understand the difference between direct vs regular plan. I had just started the investment in MF regular plans through online amcs.
If I stop investing through this platform after 3 years and switchING to direct plans. I will get units as per new rates that time. Is it affect my goals in terms of investment. Is any other way for me you will suggest.
Every installment of SIPs is counted as fresh investment for purpose of exit load and capital gains tax. Please keep this in mind while switching to direct plans. Direct plans will always offer better returns than regular plans. It is a mathematical construct. Nothing can change that. You will get better returns with direct plans despite that fact that NAV of direct plans is higher.
Hence,you will only do better in achieving your goals if you switch from regular to direct plans.
If you have any doubts about how direct plans will give better returns than regular plans despite a higher NAV, you can go through the following post http://www.personalfinanceplan.in/mutual-funds/nav-of-direct-plans-is-higher-than-regular-plans-of-mf-schemes/
Thank you Deepesh.
Hello sir,
I am new to MF. I just want to invest in MF. What my first step should be and so on … Please can you tell step by step
Hi Vikas,
You will have to first set your financial goals. On basis of amount needed to achieve those financial goals and the goal horizon, you will have to select a few good funds. Broadly, debt funds for short term goals and equity funds for long term goals. Once you have finalized the funds, approach respective fund houses, complete KYC and start investing.Invest through Systematic investment plans.
Hope this answersthe question. Let me know if you need any clarification.
Hi Deepesh
Thanks for your post. You every posts are very informative. I am 36 year old and new to MF and want to invest Rs. 10000 (ten thousand per month SIP). I am looking for long term investment lets say 10-15 year time and after 15 year wants to have good return for child education/retirement purpose.
Is it good idea to start with three SIPs as below:
– One with Pharma sector
– One with Mid cap
– One with Small cap
Please correct me if required.
Regards
Thanks Mohit!!!. Am glad that you have found my posts useful. Since your goals are long term,investment in equity mutual funds is a good way to accumulate funds for the goal.
Unless you have a sector specific expertise, you shouldn’t be investing in a sector fund.
Invest in sector funds only if you have deep knowledge about that particular sector. There is a post on my website on sector funds. Request you to go through the following post. http://www.personalfinanceplan.in/mutual-funds/should-you-invest-in-sector-funds/
Invest in equity diversified funds. I prefer a large cap heavy portfolio with a small exposure to mid-cap funds for return kicker.
Have sent you a detailed reply over e-mail.
Hi Deepesh, thats fine if sector funds require specific expertise but what if i want to invest less money in pharma sector only for a year, as i researched about it and found that some of pharma sector is even giving 40-60 % return over an year…so is it worth it?
Hi Divyam,
It is not that sector funds always under perform Nifty and Sensex. Infact, at all times, one sector or the other will outperform broader markets. It is just that you require greater skill to enter and exit the sector funds. To an expert, sector funds can be a good short term tactical play. I am not an expert and hence I have reservations.
I can not comment about performance of a specific sector. Pharma is not a cyclical industry per se. However, if the valuations have run up too high, prices can fall or be range bound for some time. Please understand I do not, in any way, mean the pharma sector companies are over-valued.
If you have done proper research and feel that the pharma companies can still outperform the broader markets in the coming years, then go ahead and make the investment. However, allocate only a small portion of your portfolio to sector funds.
See, personal finance is personal. As an adviser, I will always offer safer advice. That does not mean I am always right. You must take stock of our risk profile, do proper research, have faith in your research and start investing.
Hi Deepesh
Recently I was discussing with my RM from HDFC about investing in the mutual funds and he told me, that in the first year of investing I have to give them the cheque for entire sum of SIPs for an year (i.e. for sip of 10,000 pm I have to give them cheque of 1,20,000 as an advance). Also if I want to increase or decrease my SIP amount in next year, same procedure will be applied.
Please advise if this correct?
Hi Pankaj,
This is one of the ways. You issue post-dated cheques for SIP installments. Alternatively, you can give an ECS mandate for auto debit from your account on SIP dates. If you are issuing cheques for SIP, then in case you want to increase or decrease SIP amount, you will have to issue fresh cheques.
Would suggest you ask him for ECS mandate form.
Additional point, if you are talking to HDFC Bank RM, you will get invested only in regular plans of mutual funds schemes.
If you want to invest in direct plans, visit HDFC MF branch (and not HDFC Bank branch)
Thank you Deepesh, that was helpful.
Actually he asked me to give a single cheque of Rs.1,20,000, which made me suspicious.
I read you posts above and I think it will be better to just visit an AMFI POS.
Just one more question, will writing “Direct”in front of the fund name be sufficient or do we need to follow any other procedure?
Really. This is sad.
There are multiple options. For investing in direct plan of HDFC mutual fund, you can go to nearest HDFC MF branch or go to nearest CAMS office.
Yes, do not forget to write Direct in front of the scheme name. That will do.
Thanks Deepesh
hello sir .myself subhendu ghosh,23 yrs old want to invest in mfs through sip.i am ready to invest 6000 per month through sip.but i dont hv any clue how to start my investment .can u plz suggest me how to start investment. iam ready to invest for a longer period say 10 to 15 yrs.
thanking you.
Dear Subhendu,
Would suggest select two large cap funds and invest Rs 3,000 per month in those two funds.
It is good to see that you are planning to invest for the long term.
You can go to respective mutual fund office wth KYC documents (photograph, id, PAN and address proof) and a cheque and start investing.
And yes, invest only in direct plans of mutual fund schemes.
sir can u plz kindly suggest me those two funds as i am a novice in this field.i have two funds in my mind…axis long term equity and icici prudential long term.should i go with this?
Dear Subhendu,
Typically, I don’t offer investment advice without assessing the risk profile of the investor.
However, about the funds you have asked for,
Axis Long Term Equity Fund is a good multicap fund. It is a tax-saving fund or an ELSS. Each installment of yours will be locked in for 3 years. ICICI Pru Long Term equity is also a tax-saving. Don’t go for two tax-saving funds.
Pick up ICICI Focussed BlueChip Equity Fund instead.
There a few recommendations that I gave on a TV show I appeared in recently. The video is on the website. You can take cues from there too.
Please understand these are good funds but I am not sure if these funds are suitable for you.
Good luck!!!
thank u sir .its really helpfull.
Am glad you found the response useful.
An additional point, invest in direct plans of MF schemes. If you go through a local distributor, you will be investing in regular plans of MF schemes.
Visit the nearest Mutual fund branch for investment.
sir how can i get expert advice as u said about risk profiling and all that.and in future after investing if i needed any advice where from can i get that?though i regularly follow some news channels but its not helpful.how can i contact a expert from kolkata registered with sebi?
Subhendu, Risk profiling is no rocket science. Any advisor before recommending you investments, must assess your risk taking ability and your comfort with risky investments. Moreover, he/she also recommends you product based on goals and investment horizon.
Go to this link http://www.sebi.gov.in/sebiweb/home/detail/26311/new/List-of-Registered-Investment-Advisors
and enter %. You will get the complete list of SEBI registered investment advisors in India.In fact, there a quite a few in Kolkata. You can check with them if you provide advice on mutual funds.
Do not go with people who ask you to invest through them or their relatives. Invest only in direct plans.
Btw, I am also a SEBI registered investment advisor. I can also advise you. Though I am based in Mumbai, I typically advise people all over the country and even NRIs. The communication is through phone or Skype calls and e-mails. If you are interested, you can visit the “Our Offerings” section on my website.
Good luck!!!
thank u so much for ur valuable advice sir.
Hi Deepesh,
First I would like to thank you for giving such a nice insights. i would like to know if these big AMC like HDFC MF, DSPBlackrock MF, Kotak MF, JP Morgan MF, etc have online facility to accomodate direct plans. You have mentioned that I have to reach out to the nearest AMC brach to invest first time and then we can ask for online credentials to manage our investments, but I would like to know that if we can invest online in AMC’s direct plan even for the first time, like if I can visit HDFCmutualfund.com and buy HDFC balanced fund -Direct or it is mandate that to visist the branch for the first time.
Thanks
Hi Sudipta,
Am glad that you found the post useful.
About investment in direct plans, if you are KYC compliant, you can invest in direct plans of MF schemes online. You don’t need to visit the AMC branch.
In fact with AMCs like Quantum and Reliance, you can even do e-KYC.
This is an old post. Please go through this post on direct plans
http://www.personalfinanceplan.in/mutual-funds/invest-online-in-direct-plans-of-mutual-fund-schemes/
I have not checked with all the AMCs but most AMCs will allow investment in direct plans online if you are KYC compliant.
So, if you are an existing investor in MFs, there is no need to visit MF branches. Get your net banking credentials and start investing.
If you are a new investor, you can visit nearest office of any AMC (or go for e-KYC) and finish KYC. Subsequently, you can start investing online in direct plans with any AMC.
Please let me know if you need any clarification.
Thanks Deepesh for your valuable input.
I am KYC complaint but on May 2014, but I cannot see my details like address or contact details, mostly it would be permanent address and current phone details but I wanted to confirm the details, what is the process to see my details.
I wanted to see the details because I want all the documents and communication to be directed to my permanent address and not to local adress as I might change my local address in near future.
Do AMC’s take data from KYC for sending documents (If required)or we have to register seperately with the AMC while investing and they take data from that.
Thanks
That’s not a problem. You don’t have to renew KYC month. Even my KYC was updated last year only and I am fine.
To find out your KYC address, drop an e-mail to your KRA. You can go to this link and check which KRA agency (CVL,Karvy, CAMS etc) did your KYC.
https://www.cvlkra.com/
Once you find out, drop an e-mail to them requesting your KYC acknowledgement letter. You must drop e-mail from your registered e-mail id. You will get response within 24 hours. KYC acknowledgement letter has all the details. I did this with CVL for my KYC acknowledgement letter.
If you visit AMC office, they will ask address details in the application form.
However, if you are investing online, they may or may not ask. If they do, they will send the documents at the specified address. I am not sure if they will update the KRA agency with the same address (so that your KYC also gets updated). Think they will but I am not sure.
In any case, it is better to have same address everywhere.
So, find out from KRA agency what your current updated address is. If required, get it updated.
Thank you so much for the prompt response. I will check with KRA.
Hi Deepesh, If I invest through an agent, does AMC consider it a direct plan or regular plan?
Hi KK,
If you invest through an agent, it is Regular plan.
AVAILABLE in Direct plans of various MFs all at one single place?
Dear Baskar,
You can do that with MF Utility. You can invest in plans from different mutual funds.
In fact, from January 1, 2016, MF Utility also allows online investments in direct plans to retail investors.
thank you Deepesh Raghaw Sir
can i invest in mutual fund utility in direct and will it be considered direct.
if i goto the individual site will it also be considered direct if elected so.
Hi Munish,
Answer to both the questions is Yes.
So, go Direct and save money.
Hi Deepesh,
Once i switch units from regular plan to direct plan, all the new units
of the direct plan will have capital gains tax if redeemed within one year.
Is this understanding correct ?
Dear Saket,
Switch is equivalent to redemption from regular plan and investment in direct plan.
So yes, exit load and capital gains tax implications will be there on sale of units in regular plan.
Investment in direct plan is a fresh investment and there will capital gains tax implication if you sell within 1 year (for equity funds) from the date of switch.
Thanks Deepesh
I find your blog excellent for MF and other materials. Following this article I am thinking of investing in direct MF along side my existing regular plans. But I got some confusion if you can help
I have registered using my existing regular SIPs folio in AXIS MF, ICICI MF etc. and created my id for respective websites.
I have registered for all of AXIS, ICICI, HDFC, BIRLA SL using my regular SIP folio done through a broker for each of the fund houses.
Now after login if now I want to invest say in the some fund of the MAC or any other fund will the bank mandate and DP participant of the regular original folio I used for registration would be considered or I need to have new BANK ECS Mandate.
Thanks Bijan. I am glad you have found the posts useful.
You can purchase direct plans under the same folio.
For SIP in direct plans, you might need a separate ECS mandate. But that can be done online.
Should not take more than a couple of minutes.
Thanks for your prompt reply
SO if I got it correct I would select say the same regular old folio number but would select plan as direct and register new bank mandate as per respective website instruction. Then if so then I have to also send them by courier/post my signed with cancelled cheque related to bank verification isn’t it?
If you are doing it online, there is no need to send a cancelled cheque.
When you register for SIP, you will be given a registration no. on the MF website.
Just go to website of your bank (net banking) and register the fund house as biller. You will need to enter the registration number from MF website while registering the biller.
When you try these things out, everything is self-explanatory.
You can even call customer care of AMC. They will guide you during the process.
I got it and Thank you very very much.
I request you to write have a article on newly introduced Upfront commission the backdoor way in the name of transaction charges of Rs. 150/- for investing Rs. 10000/- in MF. Its very confusing like how it would be charged, for SIP and one time or multiple time. It would be better if you discuss the same.
Sure. Will cover it in one of my posts.
Btw, this is not a new charge. This has been around for many years (unless you are talking about something else).
See, personally I am not against mutual fund distributors. They are providing a service for which they need to be compensated.
So, let’s not be too harsh on them. In fact, in the entire financial services industry, MF distributors get the least amount of commissions. Insurance agents make up to 40-60% of first year premium.
It depends. They can charge it for every installment too.
Btw, there are no transaction or SIP registration charges if you are creating SIPs in direct plans.
Hi deepesh,
I would like to invest a handsome amount in equity Mf.,could u plz suggest my assets allocation is on right track or not?
40%=diversified equity funds
40%= large cap
20%= mid cap
Plz suggest
Regards,
Shailesh
Hi Shailesh,
It is not possible to give exact allocation with knowing more about your financial risk profile.
Btw, even large and midcap funds are equity diversified funds.
What according to your are diversified funds?
Hi I am new in MF investment &wanted to start an else in axis long term equity.
How do I proceed? I mean if I go for direct plan then what are the things that I shall have to manage or take decision on fund allocation or like that!
Or is it like invest & forget till the lock in period?
Please suggest…thanks in advance
Hi Shamik,
With ELSS, there is a lock-in of 3 years. So, you can’t your money out before 3 years. Equity investments are meant for long term goals.
So, invest in ELSS or any equity fund if the time horizon is atleast 7-10 years.
Direct plans are best suited for Do-it-yourself investors. Such investors can research funds on their own and make investment decisions. It seems you still need to learn a bit about mutual fund investments.
Subscribe to a business daily and read personal finance section regularly. Read popular personal finance regularly. This will help you understand MF investments better.
Till such time, I would suggest you seek professional help.
Talk to a fee-only financial planner or a SEBI registered investment advisor. They will charge fee but get you invested in direct plans.
Alternatively, talk to a good MF distributor. He will get you invested in regular plans but will atleast guide you.
Hi,
I have the following portfolio in SIP, i started investing from the year 2014 and installing as monthly 2000 in all these portfolios, Please let me know your thoughts on the portfolio.
1.)DSP BlackRock Tax Saver Fund – Regular Plan – Growth – (Tax saving fund)
2.)Axis Long Term equity fund – Growth (Tax Saving Fund)
3.)L&T Midcap Fund – Growth
4.)Tata Balanced Fund Regular Plan – Growth
5.)Tata Equity Opportunities Fund Regular Plan – Growth
6.)ICICI Prudential Value Discovery Fund – Growth
Hi Sriram,
A mutual fund portfolio cannot be seen in isolation. Must be seen together with your financial goals and risk profile.
If you only want to how good or bad mutual funds are, please visit ValueResearchOnline.com.
I am new to mutual funds and want to start one long term equity fund and one sip for 10 yrs for further plan.
Which mutual funds are the best ?
Idfc or axis?
Plz suggest me.
Both have good funds. The choice between the type of funds depends on goals and risk profile.
Thanks for advise sir
Sanjay, you are welcome .
Thanks for the eye-opening article! I have been investing in mutual funds since 2014 through funds-india and wasn’t aware that investing in direct fund could have such an impact against regular funds.
I really like the ease of investment and analytical insight it is able to provide.
Not to mention that all my mutual fund investments from different houses can be managed with a single account.
Isn’t there a similar service provider that can have the same facilities while providing direct plans?
Thanks!
Thanks Mukesh. Am glad you found the post useful.
I have put out many posts on how to invest in direct plans.
For an single integrated platform, MF Utility could be an answer.
http://www.personalfinanceplan.in/mutual-funds/mf-utility-online-platform-for-direct-plans-is-now-operational/
This post will have links to other posts on direct plans.
Hi Deepesh,
Is it wise to invest in same AMC across different funds? I have invested in 6-7 funds under the Franklin Templeton. Its just because I want to invest directly rather than regular.
Dear Santosh,
I would prefer diversifying across AMCs too.
Thanks Deepesh.
Sier, as I am new to all this and a beginner. So suggest me which MF should I start for SIP
Yogesh,
You can visit the Offerings Section on the website.
http://www.personalfinanceplan.in/our-offerings/
You are my savier!! I was about to getting into Scripbox or fundsindia. Got your comments in quora and landed here. Thanks much.
I could not find login links though they mentioned there is online option for investors ?
Sunil,
I am glad you liked the post. Btw, there is nothing wrong with Scripbox or FundsIndia. They must get some return for the convenience they provide. But yes, as an investor, there is excess return to be earned by investing in direct plans. Direct plans are only suited for “Do-it-yourself” investors.
“Online option for investors”…didn’t get your question.
Hello sir please suggest me best mip plan and ICICI pru multiple yield fund series 2 plan f give monthly income or not I am looking for good income plan
Deepak,
You must do and trust own research.
There is no such thing as the best mutual fund.
Hi Deepak, for the investments done in Axis Long Term Equity via SIP, would each SIP amount invested (per month) have a lock-in period of 3 years? If I want to be invested for e.g. 10 years, SIP has to be done for 10 years or till 7 years and wait for 3 more years for redemption? Can I go for lump-sum investment in SIP each year ?
You are right, Prashant.
Units purchased through a SIP installment will be locked in for 3 years from the date of SIP installment.
SIP is merely a way to invest. You can make lump sum in the same MF scheme (and in the same folio) whenever you want.
Suggest you go through the following post on my website.
http://www.personalfinanceplan.in/mutual-funds/myths-about-mutual-fund-sips/
Thanks for the quick reply and for this informative post. Apologies for writing you name wrong. I would also like to know the KYC process, as mentioned in the AXIS MF site. What would happen to the amount invested after the lock-in period, is it necessary to redeem or can continue to be invested?
No worries, Prashant.
KYC process for MFs is same everywhere. You don’t have to repeat it. You have done it just once. And you are through.
If you are a new investor, you can go through the process specified on Axis MF website. Alternatively, you can visit Axis MF branch or nearest CAMS or Karvy office to complete KYC.
There is no compulsion to redeem. You can hold the units (continue invested) for 50 years or even more.
Thanks a lot Deepesh, this chat conversation has cleared my doubts.
You are welcome, Prashant.
Do share the posts you like with friends and family.
hi deepesh, your posts are very useful. I have been regularly investing in MFs through SIPs for the past 3 years. i got the intimation that i need to renew etc, currently i invest through an agent, but after reading ur posts i would like to renew but under the direct route. Could u please guide me, my agent is very pushy. also do i need to re invest in same funds or should i look at a new portfolio.
Currently im invested in
HDFC TOP 200 FUND – GROWTH
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND – GROWTH
IDFC PREMIER EQUITY FUND-REGULAR PLAN-GROWTH
RELIANCE BANKING FUND-GROWTH PLAN
in addition to this im also invested in ELSS funds.
Please advise
Hi Smita,
I am glad you liked the posts.
You can invest in direct plans through AMC websites. There are some aggregator platforms such as MFUtility, Invezta, OroWealth etc that you can try. These platforms are either free or charge a small fee (or a percentage of your assets).
Local distributors (atleast some of them) provide value for which they deserve to be compensated. They will help you with asset allocation, product selection and even with some operational work. Well, you can question how much they should be paid but they do add some value.
Direct plans are best suited for Do-it-yourself investors. If you can’t research stocks on your own and you are comfortable with a distributor, you are better off staying with them.
Alternatively, you can go to a SEBI Registered Investment Adviser or a fee-only financial planner, pay for the advice and subsequently invest in direct plans.
It is not possible for me to comment on your portfolio (and the allocation) in isolation. I need information about your risk appetite, about finances, asset allocation and goals to guide you better.
You can probably do away with the banking sector fund.
Please understand I offer investment advice only on a professional basis. It will be unfair on my clients if I offer investment advice without charging a fee.
Disclaimer: I am a SEBI registered investment adviser. Please see my response in that light.
Thanks deepesh. i appreciate your honest reply. why lose the banking fund?
i will get in touch with u if i need any more advice 🙂
You are welcome, Smita. Unless you have good idea about the sector, you should avoid sector fund.
That’s my opinion. Please do go through the following post.
http://www.personalfinanceplan.in/mutual-funds/should-you-invest-in-sector-funds/
Sure. Would be great to have you on board in the near future. 🙂
Good luck!!!
Hello,
I’m new to mutual funds investment.
How do I invest in Direct plans of various Mutual Funds all at one single place like Axis, HDFC, ICICI etc.
I have heard of MyCAMS, MFutility, where I can invest directly with AMCs.
I want to know is there any charges if i invest through these portals and are these portals are safe?
Please advise.
There are no charges for using MyCAMS and MFUtility.
Hi Deepesh,
I am planning to invest in Axis Long term equity fund growth direct.
Suppose i start SIP from this month i.e. May 2016, Considering the lock-in period can i redeem all the amount after 3 years?
Regards,
Srinivas Rao
Hi Srinivas,
Units purchased through each installment is subject to a fresh lock-in of 3 years.
So, units purchased through SIP installment on May 15, 2016 are locked in till May 15, 2019.
Units purchased through SIP installment on June 15, 2016 are locked in till June 15, 2019.
Please go through the following post.
http://www.personalfinanceplan.in/mutual-funds/myths-about-mutual-fund-sips/
Thanks a lot Deepesh.
i am planning to invest in this Axis Long term equity fund growth direct to save tax and also as investments.
If i invest around 50k in a year say next month without going thru SIP i can at least redeem all the units on June 2019.
but, if i go thru SIP then i wont be able to redeem all the units at one shot.
But i know through SIP, averaging will come into picture.
Please suggest which would you prefer.
Regards,
Srinivas Rao
Srivinas,
This is completely personal decision. There is no right or wrong approach.
To be honest, if I were investing in mutual funds, I wouldn’t worry so much about taking money out in 3 years.
In fact,I wouldn’t even invest in equity funds if the investment horizon was 3 years.
Personally, I might try to invest the amount in ELSS if the markets slid sharply. Do note you may keep waiting with this approach.
With yours posts, I am able to know the difference between direct and gwoth plans. Now, when selecting a SBI Magnum Global MF to buy there are 4 options like :
1. SBI Magnum Global Fund (D)
2. SBI Magnum Global Fund(G)
3. SBI Magnum Global Fund -Direct Plan (D)
4. SBI Magnum Global Fund- Direct Plan (G)
Could you please advise which one to go for. I think it should be last one “SBI Magnum Global Fund- Direct Plan (G)” for getting best benefit over the long term.
Thank you!
Dear Shashank,
There is a further sub-classification based on Dividend or Growth option.
Yes, choose SBI Magnum Global Fund – Direct plan (G).
What will be difference in cost value between Direct plan and regular plan?
I want to purchase DSP blackrock microcap fund in direct plan but the agent said if you go for direct plan the cost value will be more than the regular plan of same fund.
So, please help me out with the solution of this.
Dear Anirban,
You can find this value of ValueResearch website.
See, NAV of direct plan is higher because if offers better returns than regular plans. Both regular and direct plan started at the same NAV on January 1, 2013. Since then, NAV of direct plan has moved up faster because of better returns. This difference will continue to grow over a period of time.
http://www.personalfinanceplan.in/mutual-funds/nav-of-direct-plans-is-higher-than-regular-plans-of-mf-schemes/
Also understand, you won’t be able to invest in direct plans through a distributor. Your distributor will not make any money if you invest in direct plan.
Thanks for the response.
I know that NAV will be more in direct plan than in regular plan.
But my question was that will the cost per unit of purchasing the mutual fund will higher if I purchase in direct plan than that of regular plan.
Because the agent said it will 0.5 rupees higher per unit if I purchase in direct plan than that in regular one.
Please help me with this doubt.
I invest in direct plans through AMC websites and MF Utility. Take my word. There is no additional charge.
Your distributor must be referring to difference in NAV. It is Rs 46.19 for direct plan and Rs 45.125 for regular plan
http://www.personalfinanceplan.in/mutual-funds/performance-comparison-direct-plans-vs-regular-plans-of-mutual-funds/
Thanks Deepesh for the great solution.
it really helped me to clear my doubt.
You are welcome, Amiranjan.
Hello Deepesh,
If i buy mutual funds from following is it direct or distributor transaction?
Medium Type(Direct/Distributor)
1.
Investment account linked
to my saving account such as
Kotak Mahindra, SBI etc.
2.
Through CAMS
(http://www.camsonline.com/)
3. Though scripbox.com
4. Through https://www.myuniverse.co.in
Best Regards,
Shivdeep
Hi Shivdeep,
1. Regular
2. Can be both direct or regular depending upon options selected
3. Scripbox: regular
4. MyUniverse: Regular
Hi Sir,
I have an account in HDFC Securities online account and it has Mutual Funds services link. If I start a SIP or buy mutual funds using this will it come under the DIRECT or REGULAR plans..
And also, i wanted to check that, can I open a CAMS account online?
Thank You,
Venkat.
Hi Venkat,
With HDFC Securities, you will invest in regular plans.
If you are already KYC compliant, you can simply register on CAMS website and start doing transactions.
Thank You sir.
May I know approx charges for getting analyst advice based on my current financial status?
Thanks,
Venkat
Hi Venkat,
Can’t comment about what others charge. Can vary significantly.
You can visit Offerings page on my website to get an idea about what I charge.
http://www.personalfinanceplan.in/our-offerings/
I invested 2 lakh lumpsum through icici bank. As icici bankbis distributor they invested that money in regular plan instead of direct plan. I want to know will it affect returns. Or should i ask them to switch.
Yes, returns on direct plans are higher than returns on regular plans.
Bank will not be able to switch. They act as distributors and can get you invested only in regular plans.
You must contact AMC (mutual fund house) branch or CAMS office for the same.
Would suggest you hold on for atleast one year before you switch. If you sell before 1 year, exit load will be charged. Also, you will have to tax at 15% on short term capital gains.
Dear Sir,
You recommend investment in Direct Plan over Regular Plan, However as lesser number of units are allotted , in Dividend Payout option total amount of dividend received will be lesser than than that of Regular Plan
Dear Pradip,
For the first part of your query, please go through the following post.
http://www.personalfinanceplan.in/mutual-funds/nav-of-direct-plans-is-higher-than-regular-plans-of-mf-schemes/
For the second part of your query, there is a technical issue.
Dividends can only be paid from surplus and profits. Since regular plans have been around for a long time, they have accumulated greater surplus (for last 10, 15, 20 years). Direct plans were launched in 2013. Hence, direct plans can distribute dividend from only profits of last three years. Hence, ability of MF scheme to disribute dividend is lower in direct plans.
For the schemes launched on or after January 1, 2013, there will be no such issue.
In any case, I do not recommend investment in dividend option of MFs (especially equity MFs). Long term capital gains on equity funds are exempt from tax. So, rather than relying on dividend (which depends on the discretion of fund manager), you can invest in growth option and sell units as and when needed.
Thanks for advice
Dear Sir,
I have invested by SIP in L&T Tax advantage Fund G and HDFC Long term Advantage-G plan. As these were ELSS and units which were completed 3 yrs, Can I switch to another good return funds?
I have sorted out some funds.
1. DSP Blackrock Micro cap fund -Regular plan (G)
2. Franklin India Smaller companies
3. HDFC MidCap Opport.- Direct (G)
or if there is any other fund giving best return please advise
Thanks
Chintan B.
3.
Dear Chintan,
You have picked up all mid and small cap funds.
Strike balance between large, mid and small caps.
Good luck!!!
Can you suggest top 05 Direct Mutual Funds which can give higher return over next 10 years.
Thanks!
Hi Amol,
I do not know which funds will give the best returns.
Suggest you pick up funds in line with your financial goals.
If you need professional assistance, please visit the Offerings section on my website.
http://www.personalfinanceplan.in/our-offerings/
Hi Deepesh,
I have recently opened a Mutual Fund through PolicyBazaar with BajajAllianz.
What I am understanding from this post is that, my cenent plan is a Regular Plan as it was booked via a third party (PBazaar). To make it a Direct Plan, I should have opened my account directly with BajajAllianz !!, is it ?
My policy is just started and under review period, so please suggest If I should be investing in Direct Plan and how.
Hi Tarani,
You have purchased an insurance plan. PolicyBazaar does not sell mutual funds.
Direct or regular plans are only meant for mutual funds, not for insurance plans.
Its a ULIP Mutual Fund which also have a life cover (Insurance plan). I opened it for investment and tax benefit.
I believe its a type of mutual fund like ELSS. Can you provide some more details on a Direct MF, I think there is a big gap in my understanding.
Dear Tarani,
ULIP is an insurance product. With ULIPs, a part of your money goes towards insurance and remaining goes towards investment in funds.
Suggest you don’t get into this confusion of direct plans of MF schemes right now. First clarify more basic concepts.
Suggest you go through the following post.
http://www.personalfinanceplan.in/mutual-funds/ulips-mutual-funds-term-insurance/
Thank you so much Deepesh for your prompt and clear reply. I am getting to know a lot from your posts and replies.
You are welcome.
Please do share the posts you like with friends and family.
Hi Deepesh,
I luckily went through your blog and I found it very useful. Thank you very much for that and I am fan of yours. I am new to mutual fund but want to invest in mutual fund with SIP around 2-3k pm long term around 15-20 years or so. I am 25 year old. Please suggest me top mutual funds to invest which would provide me good return and additionally would have tax saving plans under 80 C. I have gone through lots of research on MF’s but wanted your suggestions. Adding to it, would tax saving MF would give me good return as compared to non tax saving MF’s?
Thanks in advance 🙂
Regards,
Nitin.
Hi Nitin,
Glad you found the post useful.
There is not enough evidence to suggest that tax-saving funds will do better than non-tax saving funds.To be honest, there is no reason either why tax-saving funds should outperform. Lock-in of three years cannot give fund manager wings. 🙂
So, unless you have to invest to save taxes, there is no need to invest in tax-saving funds.
Suggest you trust your research. You will learn from mistakes over a period of time and get better.
Additionally, please note equity investments are meant for long term. However, that does not mean you invest less and expect long term to take care of everything. You must increase allocation as your income grows.
Please understand I offer investment advice only on professional basis.
Suggest you visit the offerings section for more on this.
Good luck!!!
SIR,I AM INVESTING IN FRANKLIN TEMPLETON THROUGH FINEDGE ADVISORY.IS IT TAKING ANY COMMSSION FROM MY RETURN.HOW IT WILL AFFECT ON MY RETURN
Dear Avinash,
I don’t know. You can check with them if they are getting you invested in regular plans.
If they are, they will get commission from mutual fund houses.
Most likely, it should be regular plans only.
You can check your account statement too. Direct plans have DIRECT written in front of the scheme name.
For impact on returns, suggest you go through the following post.
http://www.personalfinanceplan.in/mutual-funds/performance-comparison-direct-plans-vs-regular-plans-of-mutual-funds/
Dear Deepesh sir,
I have a sip of rs 2000 in Hdfc with hdfc mid cap growth fund i want to switch the fund will you suggest me and what fund is better tax sever as elss or normal funds
Dear Deepak,
Why do you want to switch?
Invest in ELSS if you need tax benefit under Section 80C. Otherwise, stick to a normal fund.
For direct plans, the scheme name is suffixed with Direct.
Regular plan: HDFC Balanced Fund
Direct plan: HDFC Balanced Fund – Direct plan
You can check NAV too. Account statement contains NAV of your investment.
NAV for direct and regular plan is different. You can match the NAV of the date of account statement with historical NAV for direct or regular plan.
Thanks sir
may i invest in direct plans with my online hdfcmutual fund account
Yes, you can.
Just that you can invest in both regular and direct plans through HDFC online account.
Don’t end up investing in regular plan.
Hi Deepesh
I have invested a lump sum in a regular plan of Kotak debt fund. I have already crossed the exit load restriction. I have taken dividend reinvest option.
I want to know is there is any benefit if I change now from regular to direct plan of the scheme. Do distributors like banks charge any commission once the units of a lump sum are allocated?
This is what I can find on my bank’s commission schedule,
KOTAK FLEXI DEBT
Upfront 0.00% Trail First Year 0.60% Trail Second Year 0.60%
Transaction fee was nil.
I think that there must be some benefit in direct plan as expenses are less but I don’t understand how because the bank doesn’t look like charging anything.
Please reply urgently.
Hi Atul,
Yes, there is benefit in shifting to direct plans. You can see there is trail commission of 0.6%. You will save this much cost every year, thereby adding to your return.
However, you do not just need to look at exit load. Exit load period is anyways quite short in debt funds. In dividend reinvestment option, units purchased through investment of dividend will be subject to fresh exit load period.
You also need to look at capital gains tax implications. You will have to pay tax on capital gains at marginal income tax rate if you redeem before 3 years. After 3 years, you pay capital gains tax at 20% less indexation.
So, even though you must switch to direct plan, you must keep these aspects in mind.
In any case, make your future investment in direct plan only.
Additional point to consider is whether you must invest in dividend reinvestment option. Barring a few scenarios, I prefer growth option. Suggest you go through the following post.
http://www.personalfinanceplan.in/mutual-funds/mutual-funds-growth-or-dividend/
dear Deepesh sir,
Thanks sir for a valuable information i have a quary that i have a Dmat account from hdfc securities but i did not know nothing about it can mutual fund in direct fund can be done with dmat account.
And there is any link or pdf files for basics of mutual fund and dmat.
thanks sir
Dear Deepak,
You can keep both direct and regular plan units in demat account.
However, since you are investing through HDFC securities, you must be investing in regular plans.
For basics of mutual funds, try investopedia.com
Hello
I am a first time investor.I am planning to invest in MF.My question is if I open an account in KArvy,can i invest in Direct plan of Mfs????Are there any charges that Karvy will levy for that?You mentioned above that in Funds India we can only invest in Regular plan.Is that the case with Karvy too???
Have not tried.
With Karvy account, I think you can invest in direct plans too (permits both). You can create a login and check.
Direct plans have Direct suffixed to scheme names.
As I understand, with Karvy login, you can only invest in funds serviced by Karvy.
Hi Deepesh,
I would like to invest around 50kPM in funds. i have a CAMS online account and can invest using the same instead of ICICIDirect as they have brokerage and offer only regular plan.
Can you please suggest Balanced Funds and other funds which i can get better returns for shirt term and long term. Many Thanks.
Dear Sai,
As I understand, you can invest only in mutual funds serviced by CAMS through CAMS online account. Shouldn’t be much of a problem though. There are many good AMCs serviced by CAMS.
Choose equity funds for long term goals and debt funds for short term goals.
Please understand I provide investment advisory services only on a professional basis.
Please visit the offerings section for more details.
Dear Deepesh, Thanks for your time, effort & knowledge you are sharing with us.
I have a query.. Can you assist me in finding the best equity plan or help me to understand how to identify a best MF scheme. I have shortlisted the below 2 & I checked Portfolio & performance during the edgy period.
Axis Long Term Equity Fund (G) (Regular plan SIP stopped)
DSP BlackRock Micro Cap Fund – Direct Plan (SIP to be started in NOV)
UTI Transportation and Logistics Fund
Thanks.
Dear Ashok,
Am ok with multi-cap and small cap fund. Just that do not go overboard with small cap investment.
Avoid the sector fund unless you have really good idea about the sector.
Thank you Deepesh
Liked your article and I have read all the comments and your prompt reply’s
Couldn’t wait to ask a question
I have started investing in Axis Long term MF – Direct Plan for tax benefits and I decided to continue investing for long term growth. But I don’t know whether to go with investing in stock market taking personal decisions by fundamental analysis or go with MFs but I have started getting to know about stock market and time to do some research.
What is the advise that you have ?
It would be very helpful for me
Thanks
Raj
Hi Raj,
Difficult to take sides.
MF investing is relatively low stress. Your investment is automatically diversified. You need much lesser investment discipline when it comes to MF investing.
Direct equity investing is more risky but if you get it right, it will be much more rewarding. However, it requires much greater effort.
Can you analyze business? Can you read financial statements? Are you willing to accept your mistakes and take corrective action? Can you book losses? If you can do all this, you can look at direct equity too.
In my opinion, it is not as easy as it seems. Reading business newspapers and watching CNBC will not help much.
Since you want to take exposure to direct equity, suggest you make core part of your portfolio through MFs. You can invest remaining part in direct equity. You will learn with time and experience.
Hi Deepesh
My PAN is KYC complied. I have some regula MF investments. If I start SIP on direct funds can I do all my trasactios online, especially redemptions and stopping of SIPs in future.
Regards
Santhosh
Dear Santosh,
Yes, if you start SIPs online, you can close the same SIPs online.
Purchase, redemption, registration and cancellation of SIP etc can be done online.
Thank you Deepesh
Thank you Deeepesh
Excellent replys. Thank you deepesh .one of the best site i seen regarding the mutual fund .
Thanks VS.
Please do share the website with friends and family.
Hi Deepesh
I’m considering Birla SL Dynamic bond fund now. Will you recommend Lumpsum purchase or SIP in it ? I already have equity MF SIPs
Hi Santhosh,
Lumpsum. You can invest lump sum in debt funds.
Won’t comment on a specific fund but Dynamic bond funds actively manage duration based on interest rate outlook.
Thank you Deepesh
Dear Deepesh,
Your article enlightened me, especially the Q & A part. I’ve a plan to go Mutual Fund house directly and i want to invest the SIP in ELSS. The doubt is, you’ve said that we need to provide check at initial investment. why we need to provide a check at initial period?
I’ve a bank account in more than two bank, but I don’t have a cheque book. is it mandatory?
Also by any chance shall we avoid to provide a pan card details?
Thanks,
Dass
Dear Dass,
If you are KYC compliant, you can do everything sitting in the comfort of your house.
You can register on MF website and start investing.
You can make payment through net banking. There is no need of cheque book.
If you want to visit branches and invest, they will need cheques for payment.
I understand in case of a SIP, this can be done away with. But that’s the way it is.
PAN is mandatory. You can invest up to Rs 50,000 per AMC in if you do not have a PAN card. If you have a PAN, you must share the details.
Hi Deepesh,
Thanks for the clarifications and I have a few other doubts about ELSS(Tax savings).
1) My initial investment has a 3 years lock-in period, what if I invest some amount in same fund after the lock-in period. That doesn’t have any lock-in period, right? and also shall we claim the tax for the amount which is recently invested?
2) how to calculate the right time to buy NAV?
Hi Dass,
1. Every investment (installment) is subject to a fresh lock-in of 3 years
2. There is no formula. No point trying to time the market. You will most likely fail. Some investors use fundamental ratios while others rely technical parameters to decide entry levels. If you are a new investor, will suggest you don’t try to do that. invest through SIPs for now.
Hii sir; I am new to MF and started an SIP 1000/- in Axis mid cap mutual fund should I stuck for the same or invest in Axis long term MF as my plan for the MF is for long term
Hi Deepak,
Stick with what you have chosen. Having faith in your decisions is extremely important when it comes to equity investing.
Hello Deepesh,
I have some of the articles authored by you and found all of them, including this one, very helpful. I have a question regarding Direct Option.
In the Reliance Tax Saver (ELSS) Fund, what is the difference in the ‘Direct Growth Plan Option’ and the ‘Growth Plan Option’? Please see the fund’s snapshot (Pg 24) on https://www.reliancemutual.com/InvestorServices/FactsheetsDocuments/Fundamentals-September-2016.pdf.
Thanks for your help,
Siyona.
Hi Siyona,
Glad you found post useful.
Direct Growth plan option is the Direct plan.
Growth plan option is the regular plan.
If you have already identified the fund to invest, you must invest in direct plan.
HIi sir ; I have started an SIP of Rs.1000/ in axis long term equity fund and I am 26 years old
1) can I gradually increase my sip of Rs. 1000/ annually in my SIP
2) can it will increase my corpus
3) As my term will be for 20 years
or else
4) should I go for constant SIP
Hi Santosh,
1. You will have to start a new SIP (and cancel existing one)
2. Can’t say
3. ok
4. Your choice. Thin about increasing investments when your salary increases.
Hi Deepesh,
Your blog is so useful. I have below queries, can you please suggest me.
I can spend 5k per month in MF(elss, non elss but not ulips)
I am 36 years old, have 2 daughters. My long time, short time goals are
1) 12years – child education.
2) 18 years – Child marriage.
3) 25 years – retirement.
Please suggest best performing MF and MF online management portals.
Thanks
PRadeep
Dear Pradeep,
Thanks.
Please understand I offer investment advice only on professional basis.
Visit Offerings section on my site for more details.
In any case, I am not permitted to offer investment advice without following due process. You can refer to SEBI Investment Adviser regulations for the process.
There are various online portals for investment in direct plans such as MFUtility, Invezta, OroWealth etc. You can even invest through AMC websites.
I used to invest in direct plan.but while investing the nav shown is of previous day and when I am getting the units is of another nav. Is there
With equity funds, you will get the same day or the next day NAV depending upon the timing of your order.
You can’t get previous day’s NAV.
I used to invest in direct plan.but while investing the nav shown is of previous day and when I am getting the units is of another nav. Is there any way to invest on the shown NAV. Please help.
1. Can I get a consolidated view of the investments made for the month through MFUtility?
2. Also what if I want to change my future investments to another fund? What will happen with the money invested with the old fund? Will there be any option online through MFUtility to switch to the new funds of your choice?
3. Does MFUtility provide the option to invest in penny stocks also(sorry for my misunderstanding, if any)?
1. All your investments (with AMC which are onboard MFU) are visible in MFU portal at all times. You can export the investments to an excel sheet.
2. You can sell in old fund and purchase in new fund. Switch is possible for funds within the same AMC.
3. No. MFU is only for mutual funds.
I plan to invest in DSP-BR regular plan with a monthly investment of 1000 for 5yrs through a fund service Fin Edge. The plan comes with a exit load of 2yrs. I see a difference of 2rs for each NAV in direct and regular. My advisory prefers to go with regular, how to switch to direct plan with them?
Your advisory seems to be distributor itself.
Hence, it can’t offer direct plans to you.
What you mean by distributor itself? So, the plan which I am going with is good I hope so. So, if i want to switch to direct plan, how can I?
Dear James,
Yes, a distributor is expected to give you good advice.
You can switch from AMC website or by visiting AMC office.
Ok Fine. Thanks
Hi Deepesh,
I am new to investment world. I am planning to start SIP for the first time. Some people suggested me go with Fundsindia or CAMS. Could you please suggest me thru which I can proceed.
Hi Sunee,
You can go through either.
Just that with FundsIndia, you will only be able to invest in regular plans.
FundsIndia provides you a much better interface though.
Hi Deepesh,
I want to know how profit is calculated on ELSS mutual fund.As if NAV of any MF rises between the year but at the end of the year it drops to the same initial NAV. Then how profit is calculated?Does it consider only last time NAV,and not between the year or term(3yrs)?
Hi Anshu,
In case of mutual funds, profit is only at the time of redemption (as far as income tax dept is concerned).
Profit=sell price – buy price
So can you explain how profit is calculated if I choose MF for 3yrs.Is it annually?
Dear Anshu,
I am not sure if I got your question right.
You are looking for profit or for annualized return?
Profit is always buying price -selling price.
I am asking how return is calculated on ELSS over 3yrs based on fluctuating NAV throughtout.
Your notional profit/loss figure will change every day. You can use excel XIRR function to calculate return
Dear Deepesh Sir,
I have an active SIP with geojit and on 4 funds. Since exit loads apply for 1 year and it just started. I wish to open a new SIP under direct plan. Only Doubt I have not cleared is weather we can opt ECS for SIP fund transfer online. I mean we can set the ECS by online itself from state bank account for purchase of units regularly. Your kind help would be highly appreciated.
Dear Adarsh,
Yes, you can set up SIP in direct plan online.
I am new to investing,i want to invest in elss 1.5lakhs for tax saving,
which are good funds and should i invest directly or got through a agent
Please advise
Dear Yashasvi,
Only you can answer if you need assistance or can do it on your own.
If you are not very confident about picking funds and investment discipline, you can go through a distributor and invest in regular plans.
Alternatively, you can seek services of SEBI RIA and invest in direct plans.
Thanks for the prompt reply
My doubt was whether it good to invest in regular or direct plan
which is more profitable.
Direct plan of the same scheme will give better returns.
Thanks a lot
Just got confused because as per crisil rank
Regular is better than direct
Good day Deepesh,
I have studied about mutual funds from online as well as from some friends working in banks. My plan is to get some good returns in the next 3 years so that I can support my higher studies goal after that period. I plan to invest in Mutual funds for the same purpose. After all the texts which I have gone through , I think direct mutual funds through MF utility is a good option considering the fact that I will compare and select funds after online research. I have selected Franklin India prima plus, hdfc balanced fund, sbi bluechip fund. Please suggest if my analysis is correct for my goals.
Dear Ravi,
If you are planning to invest for only 3 years, don’t invest in equity funds. That’s my opinion.
Invest in debt instruments.
Dear Deepesh sir,
I’m already investing in various MFs using FunsIndia (regular plans).
Recently i have come across direct investment via MF utilities (direct plan).
I have few queries:
1. How can i transfer my SIP in already existing MFs (FundsIndia) to MF utilities?
2. Do i need to first stop/cancel those SIPs in FundsIndia and then start new SIP in direct plans using MF utilities with the same folio number?
3. What will be the exit load and other charges applicable?
4. What is the recommended way to transfer according to you.
Regards,
Vandan
Dear Vandan,
1. You can’t transfer SIP
2. Yes
3. Will vary from scheme to scheme. Do consider capital gains tax too.
4. There is no recommended way. Common approach is to wait for equity funds to complete exit load period (typically 1 year) and then switch. Long term capital gains are exempt for equity funds after 1 year. For debt funds, you also need to see the timing of usage before deciding to switch.
Dear Deepesh sir,
Thank you for the kind reply.
I was thinking of just cancelling my SIP in FundsIndia. Not to redeem it for the next 1-2 years.
And to fresh start the SIP in the same MFs in direct mode with the same folio numbers.
I hope this will not result in exit load and capital gains tax.
Kindly guide.
Regards,
Vandan
You are welcome, Vandan.
That’s ok. Exit load and capital gains comes into picture only when you redeem investments (not for SIP cancellation).
dear Deepesh,
recently i opened DEMAT account with SBI.
how can i invest in MF through DEMAT?
The purchased units will go into demat account. You have to check with the bank.
In my opinion, there is no need to open demat account for investing in MFs (and putting MF units in demat account).
Suggest you go through the following post.
http://www.personalfinanceplan.in/mutual-funds/you-dont-need-a-demat-account-for-your-mutual-funds-investments/
Hello Deepesh Sir,
My portfolio consists of SIPs of 2000 each in following funds
2 diversified funds (1.Sundaram Rural India 2. BSL GenNext Fund), two small cap (1.DSPBR microcap fund , 2. Franklin India Smaller Companies Fund ) one multicap (LNT India Value Fund) and two ELSS (1. DSPBR tax saver 2. BSL tax relief 96 ) should I go with these schemes or switch to some others?
I wants to invest 10000 more per month in mutual funds for long term pls guide me for that
Pls advice me some liquid or debt funds for investing lump sum amount around of rs 100000 per annum
Kindly Guide
Regards
Sneha
Dear Sneha,
Never easy to comment on MF portfolio in isolation.
Personally, I do not like the portfolio structure in general (unless of course these funds were bought for a purpose).
I say this even though you have quite a few good schemes.
Do note I do NOT mean that you will NOT earn good returns from these schemes.
Cannot comment on specific MF schemes.
Hello Sir,
I am planning to invest in mutual funds and SIPs, (I am 28 years old and working in a private company). I dont have any exposure in this. So please suggest, How do I start? Which mutual fund is the best option? Initially i would like to start with SIP (rs.3000 per month)and i can invest at least for 3-5 years. SO, How should i start with – regular plan or direct plan, through Web portal like Funds India/scripbox/myuniverse or any local agent.
pls help me i am planning for a long time but i am not able to finalize. Thanks!
Dear Nilesh,
Wouldn’t comment on the specific fund.
Suggest you start with a balanced fund.
If you can choose fund yourself, then go direct. Go to CAMS/Karvy office, complete KYC and fill up the SIP form.
Once you are KYC compliant, you can even invest online.
If you need assistance, go to a local distributor or Registered investment adviser. He should be able to guide you.
You can go with FundsIndia, Scripbox or myUniverse too. Just that you will invest in regular plans if you invest through these portals.
Hi Sir,
First of all thank you so much for sharing valuable information by spending your valuable time for us.
I have account for trading stocks in karvy.I am planning to start SIP with karvy.Can I buy direct plan mutual funds from karvy?.What is the difference between buying mutual funds from karvy and MFU ?
Can you please share your answer..
You are talking about Karvy website?
Btw, Karvy does not service all the AMCs.
Hi sir,
This is continuous question for previous one.MFU is also an distributor like sharekhan,karvy or any thing else.I don’t have any option to login in MFU website.Please tell me what is MFU ?
Suggest you go through the following post.
http://www.personalfinanceplan.in/mutual-funds/how-to-register-with-mf-utility/
Thanks for reply..
Sir,
I want to purchase a mutial fund every month ( as per financial condition ) with a fixed amount and dont want to start sip . Pl let me know what is different in between to purchase same mf every month or to purchase by sip in same amount.
Tks
Hi Abhay,
There is no difference. If you have the discipline to purchase every month, you do not need SIP.
Just that most investors are not disciplined enough.
Hello sir, I am 22yrs old, I would like to start SIP 4-5k per month,
can you please suggest the funds
1 fund should be I will hold it for long yrs,
and other should small (within 2-3ys) which gives a higher rate of interest,
and How can I invest, can I invest myuniverse.in , Is it good?
Hi Tarun,
For short term, pick up a debt fund.
For long term investment, pick an equity fund. Start with a balanced fund.
You can use myuniverse.in. The only problem is that you will invest in regular plans (with myUniverse).
Dear Sir ,
Please confirm following things:-
1. whether there is a lock in period in SIP. If I will invest for 2 year, can i withdraw at any time before completing two years ? if yes, what will the consequence for this ?
2. Can i directly purchase SIP online in their respective mutual fund website?
3. If there any documentation formality/any other problem if will go for direct plan ? I can choose good funds myself .
Dear Sir ,
Please confirm following things:-
1. whether there is a lock in period in SIP. If I will invest for 2 year, can i withdraw at any time before completing two years ? if yes, what will the consequence for this ?
2. Can i directly purchase SIP online in their respective mutual fund website?
3. If there any documentation formality/any other problem if will go for direct plan ? I can choose good funds myself .
Hi Amit,
SIP is merely a way to invest. SIP is not an investment.
The lock-in on redemption for ELSS and exit load on other funds is not on SIP but the units purchased through SIP.
1. Every unit will have come out of exit load period depending upo when you purchased it.
For instance, if the load is for redemption before 1 year,
The units purchased through SIP installment on January 15, 2017 will complete exit load period on January 15, 2018.
The units purchased through SIP installment on April 15, 2017 will complete exit load period on April 15, 2018.
2. Yes. You don’t purchase SIP. You set up an SIP. Remember SIP is a way to invest.
3. Once your KYC is done, then nothing is required. Everything can be done online.
Suggest you go through the following post.
https://www.personalfinanceplan.in/mutual-funds/myths-about-mutual-fund-sips/
Deepesh what are the best online discount brokers in india.
Is sharekhan a better option
Can’t really comment.
The first name that clicks when I hear of discount brokerage is Zerodha.
Sir,
Google Search Jagoinvestor
Monthly Income Plan : A detailed guide on MIP’s
Features of Monthly Income Plans
2. No guarantee of Regular Income
The biggest myth about Monthly income plans is that they provide guaranteed monthly
income, which is not true (See this question asked by Krishna on our Forum). While the
aim of MIPs is to regularly declare dividends, it might happen at times, that they do not
declare any dividends because of bad performance. To top that, there is no regulation or oversight on the MIP’s part to declare regular dividends. So take it on the chin, if you don’t get your income once in a while ?
– Under regular plans, you invest in the mutual fund through a distributor or a … Though the mutual fund does not directly charge you the … Since everything else (portfolio, stock holdings etc) is exactly same in direct plans and regular plans, ….
So How come The Regular Fund delclares a Dividend and the DIRECT Does NOT ?
I Have both as a study for a few months of course I will switch later but the question baffels an investor
Awaiting your expert view
Joseph Vaz
lionelvaz@hotmail.com
Hi Joseph,
What exactly is your question?
If it is about dividends, it is fund managers discretion.
Secondly, the dividends can only be distributed out of surplus(profits) generated by the fund. No or lower profits may compromise fund manager’s ability to distribute dividend.
Since regular plans have been around for a long time, they have many years of profits with them.
Direct plans came into existence only in 2013. Therefore, the ability to distribute dividends may be limited.
But again, you can always sell units to generate cash flow (you don’t need to rely on dividend).
Hope that answers your question.
Btw, You can expect this difference(dividend distribution) to narrow in the coming years.
Always remember that the fund manager does not know the purpose of your investment in the scheme.
Hi sir,
your post was really helpful..i am 27 yrs old and i want invest in two MF’s Direct Rs3000 each..one for long term(15yrs) and one for short term(5 years)..please advise some good MF’s to get get good returns..have two AMC’s in mind..HDFC and SBI..Please guide me to strart with MF..would be very thankfull to u..
Hi Narendra,
I offer specific investment advice only on a professional basis.
You can put Rs 3000 in a balanced fund for the long term goal.
The other Rs 3000 can be put away in an ultra short-term debt fund (for short-term goal).
Hi Deepesh,
I am a beginner to all this mutual funds and other types of investments.
after doing some research, i decided that a mutual fund is better for me, as it is hassle free and will be managed by a broker.
I wanted to go for HDFC balanced fund (I found the return rates to be very good). what should be my first step?
If i go to HDFC, should i open a regular banking account with them to invest? because i would prefer not to have one more savings account.
Also, is it called as SIP if i go for HDFC balanced fund or if i invest in different schemes?
Hi Badarinath,
You can visit HDFC AMC branch (not HDFC bank branch) or CAMS office and complete formalities.
They will guide you.
Make sure that you invest in direct plans.
hello sir
I am planning to invest in mutual funds but after reading many articles i am totally confused can u please guide me to invest in any mutual fund. My monthly income is 25k so please suggest me any fund in which i can invest long or short term is not an issue.
thank you
Difficult to comment, Shashank.
If you are investing for atleast 8-10 years, suggest you start with SIP (of small amount) in a balanced fund.
Hi Deepesh,
I want to save money. I can save atleast 2-3k per month. Suggest me some mutual funds for investing. Will there be any significant difference in profit for a regular or direct plan for this amount of investment?
Hi Siddhartha,
Assuming this is the money meant for retirement, you can start with a good large cap fund.
Yes, the difference can be significant over the long term.
Hi,
Your article is very informative but I have question on Regular vs Direct MF investment. Since there is different NAVs for both the plan and our return is calculated based on the NAV of a particular day, Can you please clarify from point of NAV between Regular and Direct MF ?
Hi Rajesh,
I am not sure if I got your question.
Can you please elaborate?
Btw, suggest you go through the following post.
https://www.personalfinanceplan.in/mutual-funds/nav-of-direct-plans-is-higher-than-regular-plans-of-mf-schemes/
Hello Deepesh ,
I initiated mutual fund in DSP black rock this month on Dec 20th 2017. But , I did it in Regular plan.
Can I Change it now to Direct plan ? till now , even single SIP is also not deducted. It says if I cancel now , Exit load will be charged. What does this mean ? Should I cancel it now and make a new Investment in Direct plan. How much will be Exit load in rupees ? Will it be deducted from my account ?
Thanks .
Hi Suman,
Exit load is charged on investment you are exiting. Closure of SIP means you are simply stopping further investments.
You can close SIP in regular plan.
Start SIP in direct plan.
You can exit regular plan investment after 1 year. You can now too but you will have to incur exit load. Exit load is typically 1% of the redemption amount.
Hello Deepesh ,
Thanks for the reply . I had HDFC top 200 active for 7 years in Regular plan . Now I want to stop Regular plan But want to continue investing in Direct plan . My question is if I Exit ,
1)Will i lose the market benefits what I had for last 7 years?.
2) Should I CLOSE the SIP or EXIT the plan ?
3) What will be the loss becasue of changing from regular plan to Direct plan ?
(Other than direct plan benefits)
Because as I understood it will be new Investment if I start again in Direct Plan even though for same fund.. How should I proceed ?
Kind Regards,
Suman
Hi Suman,
1. No
2. First close the SIP, then you can switch to direct
3. There is no loss.
Suggest you go through the following post.
https://www.personalfinanceplan.in/mutual-funds/switch-from-regular-to-direct/
hello Deepesh , Would like to thank for your support and time ..
I am pretty much new to this Mutual funds . .. here are my questions
1.which platform do you suggest MFuonline or CAMS ? which has the greater edge in terms of selecting the number of Mutual funds ?
2.Also i read somewhere that MFu is governing body where as CAMS is not .. is that true ? if yes , is that safe ?
if we put the money in Direct funds in the CAMS platform .. is that also commission free ? or how this commissions stuff works out .,??
3.once if we opt in the fund , is there a lock in period where in which we need to pay compulsorily ? or what if we stop paying the SIP ?
4.lets say if our SIP plan is 1000 per month , is there a way that i can pay either more or less per month or only stick to the mandated amount i.e 1000 rupees??
Thanks again and much Appreciated !!
Hi Ram,
You are welcome.
1. I prefer MFU. MFU supports more number of funds.
2. MFU is not a governing body. CAMS is RTA. Both MFU and CAMS are safe. Yes, you can invest in direct plans through CAMS site. CAMS is not a distributor. It is RTA.
3. No. You can stop SIP whenvever you want.
4. You will have to start a new SIP for the additional amount. Or you can cancel existing SIP and start a new one.
Awesome … thank you Deepesh
Hello Sir,
I am Indian origin Japanese national. I am interested in SIP with start of 10,000/month to the following 5 plans.
– HDFC Bananced Advantages
– ICICI PRU Balanced Fund
– ICICI Pru focused Bluechip
– ICICI Multi Cap
– HDFC Mid-cap
Q 1: Please advise if above plans are good for long term 15-20 years
(my plan to save for my retirement approx. 1 Cr as i am now 35 year old)
Q2: Tax Implication
I am worried about the tax implication.
If tax rate is higher than in comparision with resident India, I shall start SIP on my wife and/or mother name.
please advise the tax rate difference between the resident Indian and NRI.
Thanks & kind regards
Hi Vicky,
Please understand I give investment advice only on aprofessional basis. As I understand, you are a Japanese citizen.
From tax point of view, the taxation is same for NRIs/OCIs and residents. Just that TDS (tax deduction at source) is deducted for NRIs.
Since you are a Japanese citizens, do check taxation of Indian investments in Japan.
Suggest you go through the following posts.
https://www.personalfinanceplan.in/nri-corner-capital-gains-tax-for-nris/
https://www.personalfinanceplan.in/nri-corner-income-tax-and-tds-rates-for-nris/