{"id":1872,"date":"2022-09-07T10:54:30","date_gmt":"2022-09-07T10:54:30","guid":{"rendered":"https:\/\/jupiter.money\/blog\/?p=1872"},"modified":"2026-04-15T07:13:53","modified_gmt":"2026-04-15T07:13:53","slug":"direct-plan-direct-plan-investment-overview-benefits","status":"publish","type":"post","link":"https:\/\/jupiter.money\/blog\/direct-plan-direct-plan-investment-overview-benefits\/","title":{"rendered":"Direct Plan 2023: Direct Plan Investment Overview & Benefits"},"content":{"rendered":" \n

Introduction\u00a0<\/strong><\/h2>\n\n\n\n

Investing in direct mutual funds is becoming an increasingly popular choice for young investors. Mutual fund direct plans typically ensure better returns than regular plans\u00a0<\/p>\n\n\n\n

Let\u2019s look at the two types of mutual funds – Direct Plans and Regular Plans<\/p>\n\n\n\n

If you are planning to invest in mutual funds, you need to choose between two types of mutual funds –\u00a0direct mutual funds and regular mutual funds. The difference between the two funds lies in the way investors purchase the funds.<\/p>\n\n\n\n

However, all Mutual Funds give good returns as a long-term investment because of the power of compounding. You can use the\u00a0Jupiter interest calculator<\/a>\u00a0to explore how your investments can benefit from compounding.\u00a0<\/p>\n\n\n\n

How can Direct Mutual Funds help your investments grow?<\/strong><\/h2>\n\n\n\n

In regular plans, the mutual funds are purchased only through a banker, broker or distributor. You pay these third parties a fee, along with other processing or brokerage charges taken with the investment. This results in a high expense ratio – the amount of expenditure you incur to make returns from the mutual funds. Some other expenses incurred in managing a mutual fund scheme include sales and distribution expenses, registrar fees, fund management expenses etc. The expense ratio of the fund covers all these expenses. However, when you invest in a\u00a0mutual fund direct plan, this expense ratio is reduced, automatically resulting in higher returns. The expense ratio is lower because a direct plan doesn’t charge any commissions. In a regular plan the intermediary charges commissions, that are taken from your overall returns.\u00a0<\/p>\n\n\n\n

In a\u00a0mutual fund direct plan, you can invest directly with an Asset Management Company (AMC) or a mutual fund app. You don’t need a broker, distributor or banker to complete the investment process; this also helps avoid all the intermediary charges you would otherwise have to pay.<\/p>\n\n\n\n

What is a Direct Mutual Fund Plan?<\/strong><\/h2>\n\n\n\n

Mutual Fund Direct Plans aren’t a new concept; they were first introduced in January 2013 by SEBI (Securities and Exchange Board of India). SEBI made it mandatory for all mutual fund houses to have ‘Direct Plans’ for all schemes.<\/p>\n\n\n\n

By investing in\u00a0Mutual Fund Direct Investments, the entire financial planning will have to be done by you as an investor, including choosing suitable direct funds, looking at the funds’ offerings, monitoring the portfolio regularly, etc.\u00a0There is no guidance from a broker, and all the research has to be done by you – the investor – or you will have to rely on research reports by other entities. This could be a good thing as it helps you make strategic investment choices to maximise your investments by keeping track of their returns.<\/p>\n\n\n\n

How Do Direct Mutual Funds Work?<\/strong><\/h2>\n\n\n\n

If you choose a\u00a0Mutual Fund Direct Investment\u00a0over a Regular Investment, there is a potential difference of 7.7% p.a. in the growth of wealth (because of the power of compounding). This difference may not be noticeable in the short term but is a crucial factor in a long-term investment. A\u00a0Direct Mutual Fund\u00a0Plan generates an additional 0.5% to 1% returns yearly, compounded and accumulated over time.<\/p>\n\n\n\n

Let’s understand this with the help of an example.<\/p>\n\n\n\n

Say you’ve invested in the XYZ Bluechip Mutual Fund. You invest Rs 10,000 every month through a\u00a0direct mutual fund investment\u00a0plan. At the same time, your friend invests Rs 10,000 in the same fund but through a regular mutual fund investment plan. Both of you invest this amount every month for 10 years, during which the mutual fund gives a 12% CAGR.\u00a0<\/p>\n\n\n\n

At the end of the 10 years, you will have an accumulated wealth of Rs 18,12,832, while your friend who invested the same amount will have an accumulated wealth of Rs 16,89,230 from this mutual fund. The disparity in returns will be as your friend paid brokerage and other expenses to the bank or broker through which they invested in the mutual fund.<\/p>\n\n\n\n

The Importance of Direct Mutual Fund Investments<\/strong><\/h2>\n\n\n\n

Investing in Direct Mutual Fund plans comes with many advantages. Some of the most apparent ones are:<\/p>\n\n\n\n