In efforts to empower new investors, the platform offers cost-effective investment options that are better than Regular Plans, expense ratio for direct mutual funds lower than regular plans as there is no commission involved
February 8, 2020: India's homegrown digital financial services platform Paytm's wholly owned subsidiary Paytm Money is empowering its users with zero commission Direct Mutual Funds which provide an edge to investors over Regular Plans. From this standpoint, as an investor, you should know that mutual funds are offered mainly in two variants i.e. Direct Plans and Regular Plans. Even though both of these variants are similar in a lot of factors, still direct plans are found to be more cost-effective than regular plans. To get the best out of your investments, you need to ensure that you pick the right fund that matches your risk profile. Also, the lesser the cost of managing the fund, the higher would be your end returns.
Varun Sridhar, CEO Paytm Money said, “Investing in Direct Mutual Funds is always beneficial for investors given that they can save up to 1% that goes as commission and the returns can increase. For instance, if you had invested Rs. 1 lakh in HDFC Mid-Cap Opportunities Regular Plan for a period of five years your portfolio value would have been Rs. 1,92,626, but if you invest the same amount and same time frame in HDFC Mid-Cap Opportunities Direct Plan the portfolio value would have been Rs. 2,01,311. This difference of Rs.8,685 or 8.7% in returns is because in a direct plan the brokerage or commission is not deducted from your returns.”
The expense ratio of a fund influences its return potential to a great extent. Investing in low-cost funds like direct plans may help you in your wealth accumulation journey by offering higher returns. Apart from the expense ratio, ensure that various funds based on other qualitative and quantitative parameters are evaluated. At Paytm Money, you can invest in direct plans of mutual funds in a simple and convenient manner.