If your invested fund does not have the words “Direct Plan” then you are investing in a Regular plan. There is a major difference between direct plans vs regular plans — the expense ratio. Typically, a direct plan has an expense ratio of around 1%, while regular plans cost 2.5% per year. Just 1.5%.
It’s a small difference between direct plans vs regular plans — but one that could decide whether you holiday in New Delhi or New York or retire at 45 or 70. Over time, the difference in the expense ratio would add up significantly, thanks to the power of compounding. For example, a SIP of just Rs. 5,000 a month in a direct plan, over 25 years, would yield an additional Rs. 28 lakh over a regular plan.
Over the long term, regular plans eat into 40% of your wealth. The simple decision to ‘let the agent fill the form’ could end up costing you tens of lakhs of rupees!
Read more at: https://www.jama.co.in/direct-plans-vs-regular-plans/
