Mutual Funds: While investing in mutual funds, investors have two options – direct plan and regular plan. The funds and portfolio in both the schemes are same, but the only difference is in the method of investment and cost.
In direct plan, investors invest directly from the mutual fund company (AMC), so that they do not have to pay commission to any middleman or agent. Due to this, its expense ratio is low and investors are likely to get higher returns in the long run.
Whereas, investment in regular plan is done through agent or distributor. In this, commission is given to the agent, due to which the expense ratio increases and the returns may be comparatively slightly lower. However, in this, investors also get expert advice and guidance.
If you have a good understanding of the market and investing and can do your own research, then a direct plan may be a better option. At the same time, regular plan is considered more convenient for beginning investors or people who are short of time.
Overall, both the options are suitable for your individual needs, and the right choice depends on your understanding, experience and investment goals.
