Published: 2026-06-17 · By Bhanuprakash Sardesai
9. Direct vs. Regular Mutual Funds: The Hidden Cost
When you invest in a mutual fund, you choose between a Direct Plan and a Regular Plan. This seemingly small choice can cost you lakhs – or even crores – over your investment lifetime. Understanding the difference is one of the most valuable pieces of financial knowledge you can acquire.
A Direct Plan is one you buy directly from the mutual fund company (AMC) without any intermediary. A Regular Plan is sold through a distributor, broker, or advisor who earns a commission from the fund house. This commission is embedded in the fund's expense ratio and is paid every year as long as you remain invested. The difference in expense ratios between direct and regular plans typically ranges from 0.5% to 1.2% annually.
Let's quantify this. Suppose you invest ₹10,000 monthly in an equity SIP for 30 years. At 12% gross returns, the corpus after 30 years would be approximately ₹3.53 crore with a direct plan (0.5% expense ratio, net return ~11.5%). With a regular plan (1.5% expense ratio, net return ~10.5%), the corpus would be approximately ₹2.67 crore. That's a difference of ₹86 lakh – nearly a crore – lost to commissions!
So why do regular plans still exist? Because many investors value the advice and hand-holding that a good financial advisor provides. If you're a DIY investor comfortable researching funds online, direct plans are unequivocally better. You can instantly estimate your future returns using our free online SIP Calculator to see how even a 0.5% difference in returns impacts your corpus over time.
Most investment platforms like Zerodha Coin, Groww, and Paytm Money now offer only direct plans. Use our SIP Calculator to model different expense ratio scenarios.
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