No Commission on Direct Plans

You can avoid paying any commission to your agent by investing in the direct plans of these schemes either through lumpsum or SIPs. To invest in the Direct plan you need to approach the branch office of the fund house on your own or invest through the fund’s website. Agents earn two types of commissions from mutual funds. There could be an upfront commission which is not paid by you, but by the AMC out of its own pocket. Plus, there is a trail commission (included in the fund’s expense ratio) paid to the agent for every year you remain the scheme. By buying a direct plan, you can avoid both.

This article was originally published on April 10, 2015.