Why choose direct plans?

Direct plans have been around for more than a decade now. 10 years ago, we addressed our readers' questions about how direct plans might impact their savings. 10 years later, investors and readers already know enough about them. Yet, regular plans account for 76 per cent of assets in diversified equity funds. Should this scenario change? Is there a case for direct plans? We explore. Expense ratio This is the first thing to consider. On an average, a direct plan costs you 1 per cent less by way of expense ratio . Now, while it may look like a small amount, the 1 per cent compounded in the long run can make a significant difference. Tax implications This is the second key factor, due to which sometimes investors hesitate in making the switch. So we also decided to explore the benefits of switching and how they outweigh doing nothing and staying with the regular plans. Let's show you how to manage your taxes in case that's the only thing stopping you from making the switch. Remember, You will only be taxed on your long-term gains in excess of Rs 1 lakh each year. So, you can easily stagger the switching over

This article was originally published on August 09, 2023.