The Internet of things has touched every corner of our lives. In food & beverage it has given us access to a variety of options by sitting in the comfort of our homes, in telemedicine it has encouraged doctors to perform surgeries and consult patients remotely, in communication it has made our lives way easier by almost putting the entire world in our hands, in banking & finance, it has made our lives a lot easier by doing away with brick & motor setup and replacing it with the click of a button. While IOT has touched and changed almost everything in our daily lives, investment also has leveraged its convenience and simplicity. What used to take a lot of time in filling up forms and attaching id proofs has now been replaced with a few easier steps & clicks.
One can find a variety of options when it comes to investing in mutual funds online. You can do it online via your banks, or log on to the mutual fund website, you can do it via Demat account via RIA’s (Registered Investment Advisor), etc. There are plenty of options available, but what you should be careful about is the plan you are selecting while investing online is direct or regular.
The commission to the distributor is added in the Regular Plan TER or the total expense ratio. Thus, the NAV of regular plan is also slightly higher than direct plan and the units you get are slightly lesser than what you could have got in a direct plan. Even when you invest via a Bank or via your DEMAT account, you are investing in a regular plan attracting a higher expense ratio compared to a direct plan.
When you log on to an AMC’s website and you choose to invest in mutual funds online directly or through an RIA , you are investing in a direct plan. When you choose to invest in a direct plan online, the TER or the total expense ratio is slightly lesser as compared to the regular plan as it does not include any commission charges. You end up getting slightly more units as compared to a Regular plan.
However, whichever mutual fund you choose to invest online, always remember to do proper research before investing.