Lesson 3 of 6 · The 1% that costs lakhs · 4 min read · Reviewed 15 Oct 2026
A regular plan usually charges 0.5% to 1.5% a year more than the direct plan of the same fund, to pay the distributor’s commission. On ₹10 lakh invested for 20 years at 12%, a fee 1% higher leaves you with about ₹14.5 lakh less.
Every mutual fund takes a yearly fee called the expense ratio. You never see a bill; it comes out of your returns every day.
Most funds come in two versions. A direct plan is bought straight from the fund house. A regular plan is bought through a distributor and charges more each year to pay their commission.
Key idea: The direct and regular plans hold the same shares under the same manager. Only the fee is different.
Try the calculator and the one-question quiz on this page to check your own numbers.
The scheme name on your account statement or CAS includes the word Direct or Regular.
Yes. A switch counts as selling and buying, so it can lead to capital gains tax and an exit load. Check both before switching.
The yearly fee a fund charges, as a percentage of what you have invested. It is taken out of the fund’s value daily.
For learning only, not investment advice. Designed and built by people who have worked at India’s leading wealth management firms.