Direct Plans are Plans of Mutual Funds which you can purchase from Mutual Fund Houses or AMC's. Regular Plans are the Plans which you purchase from a broker or agent.
Let us check what are the advantages of investing in the Direct Plan and Regular Plan.
Advantages of Direct Plan :
1. Higher Returns :
Returns of Direct Plans are higher than Regular plans. This is because this plan does not include the commission of the broker or agent. The commission may go up to 0.40 % to 1.00%.
2. Direct Control :
You have direct control over your selection of funds as per your study. There is no influence on a broker.
Advantages of Regular Plan :
1. Convenient :
If you opt for a regular plan, you do not need to do as much as the procedure required in Direct Plan. Your broker will help you to comply with these procedures.
2. Expert opinion :
The second advantage of the Direct Plan as given above may be dangerous for you. It has direct control but you may take the wrong decision.
If you are buying a regular plan, you get expert advice from your broker. Broker has done a lot of research on market conditions, risk-reward assessment of all plans. They will guide you most suitable plan for you as per your risk appetite, age etc.
Conclusion :
If you have good knowledge about the market condition, economy etc you may go for Direct Plan to get higher returns.
But if you do not have good knowledge about market conditions it is advisable to go for regular plans. Your return may be reduced but you will not take the wrong decision.
It is observed that most of the investors make good returns with the help of brokers advice.
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