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Mutual Funds & SIPs

Direct vs Regular Mutual Funds: The 1% That Costs Lakhs

Direct plans skip distributor commission and compound faster. Here is exactly how much the gap costs over 10–20 years.

By LetsInvest Research DeskUpdated 20 Oct 20261 min read

On this page (2 sections)

Every mutual fund scheme has two plans: Direct (bought from the AMC/platform, no commission) and Regular (via a distributor who earns ~1% yearly). Returns are otherwise identical.

The maths

On ₹10,000/month for 20 years, a 1% expense gap at 12% vs 11% returns means roughly ₹99 lakh vs ₹87 lakh — a ₹12 lakh leak to commission. Platforms like Kuvera, Coin and Groww all offer direct plans.

The same SIP, one percentage point apart

₹10,000 a month for 20 years. The direct plan is compounded at 12% a year; the regular plan, carrying a 1% annual expense gap, at 11%.

₹25.00 L₹50.00 L₹75.00 L₹1.00 Cr11020

Scroll the chart sideways to see every year →

  • Direct plan — 12% a year
  • Regular plan — 11% a year
Direct plan
₹98,92,554
Regular plan
₹86,56,380
Cost of the 1% gap
₹12,36,174
View the numbers as a table
The same SIP, one percentage point apart — the numbers behind the figure
YearDirect plan (12%)Regular plan (11%)
1₹1,26,825₹1,26,239
2₹2,69,735₹2,67,086
3₹4,30,769₹4,24,231
4₹6,12,226₹5,99,562
5₹8,16,697₹7,95,181
6₹10,47,099₹10,13,437
7₹13,06,723₹12,56,949
8₹15,99,273₹15,28,641
9₹19,28,926₹18,31,772
10₹23,00,387₹21,69,981
11₹27,18,959₹25,47,328
12₹31,90,616₹29,68,340
13₹37,22,091₹34,38,072
14₹43,20,970₹39,62,160
15₹49,95,802₹45,46,896
16₹57,56,220₹51,99,296
17₹66,13,078₹59,27,191
18₹75,78,606₹67,39,318
19₹86,66,588₹76,45,422
20₹98,92,554₹86,56,380

The chart applies the assumptions stated above — ₹10,000 a month for 20 years, 12% versus 11% a year compounded monthly — and arrives at ₹98.9 lakh for the direct plan against ₹86.6 lakh for the regular plan, a gap of ₹12.4 lakh. These are the same figures the guide quotes, computed rather than rounded twice. Check each plan's stated expense ratio before acting.

When regular still makes sense

If you genuinely need an adviser's behavioural coaching and financial planning, a good adviser earning via fee (not hidden commission) can pay for themselves. Otherwise, go direct.

Educational content, not financial advice.

Key takeaways

  • The gap is a percentage of your money, so it compounds against you for as long as you hold the fund.
  • Direct plans are available on every major platform — Kuvera, Zerodha Coin and Groww all carry them.
  • If you want advice, pay for it directly. Advice you are not using is not worth a percentage point a year.
  • Check the actual expense ratio of each plan before switching; the 1% here is the typical gap, not a rule.

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