Investing in Mutual Funds: Why Regular is Better than Direct Plan

Mutual Funds are the most popular investment tool in today’s world. In the past few years, the active participation of investing in domestic mutual funds has witnessed rapid growth. Mutual fund investments are designed by professional experts who manage investments. This is done to relax the stress of the investor who in-general does not have adequate knowledge or time or investing experience. All Mutual Fund Schemes comes with two plans- Direct and Regular. And the conventional Regular Mutual Fund investment has established to give more remunerative results than any Direct Plan.

What is a Direct Plan?

The Direct Plan was introduced in January 2013 in India. A Direct Plan offers you to buy the fund scheme directly from the company (through the website). There are no intermediaries in the direct plan. All one needs is an ADHAAR Card and a PAN card to register on the website of an AMC (Asset Management Company) and can invest in direct plans of their different schemes.

What is a Regular Plan?

A Regular Plan is when you take the financial advice of financial experts and planners, who with years expertise plan a systematic, more reliable and high yielding investment for you. The fee for the same is 1% for advising but the high capitulated outcomes are far more what one gets in a Direct Plan.

Why choose a Regular Plan?

The regular plan is a conventional, trusted and credible way to invest in mutual funds. It involves research, advice and a personal spacing which caters one individual financial needs. There is a very nominal fee for the same which people, in general, try to avoid and end up buying a Direct Plan which may not suit their financial goals. It is as simple like paying the doctor a small fee for prescription of right medicine/treatment for one’s body or paying a CA for their expert advice which benefits in the long run.

Benefits of a Regular Plan

Investment Recommendation – Today the AMC is offering so many options which creates confusion and skepticism within the buyer to choose which mutual fund scheme is right for them. The mutual fund schemes are flooded in the market which makes the task tedious to choose which scheme is best suited for you. The choice of a good fund v/s poor fund could make a marginal difference of up to 4-5% in return over time.

Reviews and Rebalancing – Reviewing the portfolio of an investor is as important as choosing a plan. These periodic reviews help improve the performance of holdings. It increases the efficiency of the return rate from 1-2%. The financial planners and advisors aid the investor when to infuse and when to exit depending upon the ongoing market fluctuations.

Tracking of Investments and Account Changes – Account management is the utmost important factor for seeking results. An investor should know where and how much he has invested in the market. A financial firm makes sure to update and maintain your account periodically. This further assists in getting exceeding results during return time.

Periodic Visits and Meeting – The one good thing with Regular Plan is that you get personal visits and meetings with financial planners. This process keeps you updated about the current market and your holdings. One has a benefit to meet, discuss and get advice on a personal level meeting one’s personal financial targets.

If you are not an expert investor with the core knowledge, meaning that you cannot pick and choose their own mutual funds and are unaware of market, Regular Plan is for you. Relying on expert advice and consultation is a safer choice. These advisors provide expert value when making a decision regarding profitable returns. The regular plan is always considered a conventional and a more secure way to invest in Mutual funds. The more consumer friendly, Regular Plan has value added services like monitoring of your assets, facilitation of expert guidance, convenience, and a well-informed decision. The timings play a crucial role in investments, when to enter and when to safely exit is the key factor in getting superior records. As it is rightly said, “Knowledge of investment pays the best interest.’

(Author is Director with VSRK Wealth Creator)