I have been investing Rs 2,000 a month in HDFC Top 200 for the last 3 years. Will moving to the direct plan be beneficial for me?
— Dipankar Chattopadhyay
The new direct plans of mutual funds will definitely be beneficial to investors. We expect the cost advantage to be between 40 and 75 basis points annually. But before you move to the direct plan, take into account the STT, exit load and short-term capital gains tax. An exit load as well as a short-term capital gains tax will be applicable for investments that are less than a year old. The ideal thing to do would be to stop your current SIPs in the existing plan and start new SIPs in the direct plan. And once your current investments are old enough to not attract any tax or load, move them to the direct plan as well.
This article was originally published on January 17, 2013.
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