Yahoo, in association with Hansi Mehrotra, presents ‘#Ask Hansi’ a new series to help you get a better grasp of mutual funds and how you can invest smartly.
The difference between the regular mutual fund and direct mutual fund expense ratios could be anywhere between 0.1% at over 1%. Over 1% is very significant and over the long term will definitely eat into your final portfolio. If you know what you're doing, by all means go direct, but the difference goes as ‘trail commission’ to a mutual fund distributor, who then helps you with things like selecting the mutual fund (which one is right for you), should the fund manager change or the mutual fund gets taken over or some something else happens, they help you with what to do. Same thing if the market crashes or there's an opportunity - how to take advantage of it. All of these questions…the mutual fund distributor is meant to help you with all of these. And that's why they get that extra 1%. So if you need help pay that money.
Hansi Mehrotra, a CFA with global experience and founder of The Money Hans, is a celebrity in the world of personal finance in India. A powerful influencer on in the corporate/banking/finance circles. She creates fine personal finance content that simplifies complex issues into easy-to-understand stuff which lay people can identify with.