Is it better to buy mutual funds through demat account?

There are many benefits for investors who use a DEMAT account when buying mutual funds. One of the main benefits is that it’s an easier and safer way of holding securities compared to the previous method relying on physical certificates. Paper certificates can be lost, stolen, or damaged.

What is direct and regular expense ratio in mutual fund?

The difference in expense ratio makes regular plans higher than the direct plans. It is due to the fact that in regular plans, the agent commission, to the tune of 0.5\% to 1.5\%, is paid by the investor. Direct plans do not have agents or advisors and, hence, these charges are not applicable.

What is the difference between direct fund and regular fund?

A Direct plan is what you buy directly from the mutual fund company (usually from their own website). Whereas a Regular plan is what you buy through an advisor, broker, or distributor (intermediary). In a regular plan, the mutual fund company pays a commission to the intermediary.

What happens when I switch from regular to direct mutual fund?

Since switching from regular funds to direct mutual funds is considered as a new investment, the switch can attract tax on capital gains. The applicable taxes can also vary depending on the type of capital gains i.e. long-term or short-term capital gains.

Can I convert regular fund to direct fund?

Visit the transaction page, where you can buy, change, or redeem your fund units. Select the ‘switch’ option and then click on the respective fund name. It will have a ‘Direct Plan’ option; click on it and follow the steps displayed. It will take about four working days to reflect the change.

Is it normal for mutual funds to go down in value?

If your fund manager puts a lot of money into stocks that fail, you could lose a large percentage of your investment. However, the decrease in value of your mutual fund could be temporary, unless there’s some overwhelming financial news that makes you think your fund is in trouble. Up and down in the value of mutual funds is normal in short term.

Why should you invest in direct mutual fund plans?

Direct plans work best for those who want to increase their returns by investing directly through the fund and can manage the documentation on their own. While the process may look a little complex in the initial stage, it should be comfortable while investing in further schemes. Why Invest in a Regular Plan of a Mutual Fund?

Can you lose money in mutual funds?

The profit and loss in mutual funds depend on the performance of stock and financial market. There is no guarantee you will not lose money in mutual funds. In fact, in certain extreme circumstances you could end up losing all your investments. That’s why it is advisable to understand how mutual funds work.

What is a direct fund and how does it affect you?

As such, this came to be known as Direct Funds. Direct funds are generally just a different version of the regular mutual funds. The only difference is that the traditional agent/broker is not involved. As seen above, this simple exclusion has a multi-layer impact on your NAV, return on investment, and general relationship with the AMC.