Will the mutual fund agent continue to receive upfront and trail commissions even after 3 years of investment period? What is the formula to calculate trail commission?

Yes, the agent will receive trail commission as long as you are invested in the mutual fund. This starts from day 1 and continues till you redeem.

Some important tips:

1. The agent may receive additonal upfront commissions, or head commissions as well.
2. These are higher in case of close ended funds. In fact the entire 3 year or 5 year commission is front loaded. Agents and bankers have great incentive in pushing these funds in the garb of New Fund Offerings (NFOs).

Formula for calculating commission:

1. Simply compare the NAV growth between regular plan and direct plan
2. Multiply the investment and compound the growth over the duration of the investment. You can also project it for, say the next 20 years.
3. The difference between the two values is the commission you are incurring.

An illustration is show below for a client.

To understand how this works for your own folios for free, click on https://jamawealth.com to import your portfolio and understand the savings.