Multiple companies offer mutual fund policies that you can invest in, but if you want to do it yourself, let’s look at the available options.
Direct Investment Plans
Direct plans entail investing in any mutual fund scheme on your own without the assistance of a distributor or agent. It is mainly for those who don’t want any outside help for investment. One should always remember that direct plans are not considered independent schemes in and of themselves but rather are a component of the main scheme announced by the funds.
In simple words, it is like buying any product directly from the manufacturer, which will reduce the customer’s price.
However, it’s not that easy in direct investment plans because it comes with its own risks. You should have adequate knowledge about mutual funds or the capability to do research; otherwise, there will be a high risk of loss.
How To Invest In Direct Plan
There are multiple ways to invest in a direct plan. However, the most preferable is to invest in direct plans online. Certain options to invest online in direct plans are mentioned below:
- You can directly invest through the websites of the respective mutual funds through online stock trading platforms, Mutual Funds Utility (MFU), and similar digital channels.
- Some online portals also allow you to invest in Direct Plans. Such online portals are controlled by private organisations that provide advisory using artificial intelligence. They give financial management services for a fee, which may be per trade or annual.
- Few banks also provide the opportunity to invest in mutual fund programs directly through their online portals. However, it is important to remember that financial intermediaries, including banks, are mutual fund distributors. They cannot provide Direct Plans on their online portals.
Benefits Of Direct Plans
Here are some benefits of direct investment plans:
- Growth Option- Currently, direct plans offer two different options, growth option and dividend option. In the growth option, profit made by the fund will be invested back in the fund to generate more profit.
- Dividend Option- Direct plans typically offer two distinct dividend options: dividend payout and dividend reinvestment.
- When the scheme declares a dividend, the investor is entitled to a payout immediately into his/her account if the investor selects the dividend payout option.
- In the case of dividend reinvestment, the investor receives additional units of the scheme based on the applicable fund value and total payout received.
- Online and Offline Availability- At present, you can make direct investment plans through offline mode by submitting an application. You can do this online by applying to the respective websites of the mutual funds.
Direct investment plans are worth it if you don’t want any help from an agent or distributor. However, it comes with its own risks. You should keep in mind that to invest in direct plans; you should have adequate knowledge about mutual funds and a willingness to seek help by paying fees when required to avoid any risks.