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*Are you compromising on your Family’s Financial Future?*
Yesterday when I was interacting with some of my friends who continue their investments in Regular Plan of Mutual Funds knowing well the difference and the fact that they are losing huge amount of their hard earned money by not shifting to Direct plans, I tried to examine the underlying reasons.
During the discussion the following arguments were given which I would like to address
*It requires huge effort to move to Direct plans and I don’t have time*
Believe me friends it is very easy to move to Direct plans. Some of my clients have moved their entire retirement investments in Regular Plans to Direct Plans in less than 72 hrs. It just requires just moving out of your comfort zone once and I think the blood and sweat spent in earning the money deserves it.
*My Distributor gives me a consolidated picture of all my regular plans at one location and I can easily access it online*
The Direct plans of all AMCs are available on a single platform with daily updation of latest NAV of all the scheme and display of returns of individual schemes and the total portfolio. The same is available both on your laptop through net and on mobile through mobile application.
*As the NAV of Direct plans is more, I will get less units when I shift from Regular plans and this will adversely affect my returns*
This is again a mis-selling and wrong information being circulated by some Distributors. Nothing can be further from the truth. You will always get better returns and higher corpus in Direct plans even if you get lesser units by switching to Direct plans of the same fund. At the end of each business day, the NAV of both Regular and Direct plans are published but before publishing the final NAV on daily basis the fund house deducts the AMC charges and Distributor commission for Regular Plans and only AMC expenses in case of Direct plans. This will result in higher NAV of Direct plans and hence higher returns. You can visit www.valueresearchonline.com to do some analysis yourself w.r.t. returns and NAV difference. The NAV of both plans Direct and regular plans were same on 1st January 2013 when Direct plans were introduced but you can yourself see how the gap in returns has been increasing over time.
Apart from above, one other compelling reason why you should shift to Direct plans is that there is no conflict of interest which is existing in case of Regular Plans as the Distributor is getting his commission from the AMC and not any fees from you. While shifting to Direct plans you have the option of doing it DIY (Do-it-yourself) if you are aware how mutual funds work or take help of any Fee only Registered Investment Advisor who does not have any conflict of interest as there are no commissions.
So if you have been sticking to your regular plans for any of the reasons cited above, you might be knowingly or unknowingly inflicting a great harm to the corpus which your family deserves. Take an informed decision now which will help you to grow a much bigger wealth corpus for your family.
Happy Investing.

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SEBI PRESS RELEASE

 AMFI should promote direct plans to check mis-selling in mutual funds: Ajay Tyagi, Sebi

Economic Times Aug 23, 2018

Why dividend option is the worst way to get mutual fund returns

Economic Times Jun 25, 2018

 

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