Discover how seemingly small expense ratios can silently eat away lakhs from your retirement corpus. Compare direct vs regular plans and see the shocking long-term impact of fund management fees!
The Hidden Wealth Destroyer
A 1% difference in expense ratio can cost you 25-30% of your final wealth over 30 years! Most investors ignore this until it's too late. Calculate your real cost now.
Your starting investment or lumpsum
Regular monthly investment
Your investment horizon
Before expense ratio (12-15% typical)
Typically 0.3% - 0.8%
Typically 1.5% - 2.5%
First fund to compare
Second fund to compare
💸 Total Wealth Lost to Higher Expenses
₹0
This money went to fund managers, not your retirement!
Loss Percentage
0%
Annual Cost
₹0
Years of SIP Lost
0
Lower Expense Fund
✓ Better Choice
₹0
Expense Ratio0%
Effective Return0%
Total Invested₹0
Total Gains₹0
Total Expenses Paid₹0
Higher Expense Fund
₹0
Expense Ratio0%
Effective Return0%
Total Invested₹0
Total Gains₹0
Total Expenses Paid₹0
Wealth Growth Comparison Over Time
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Smart Move
Switching to direct plans takes just 10 minutes but can save you lakhs over your investment lifetime. It's the easiest wealth-building decision you'll make!
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Compounding Works Both Ways
Just as your returns compound, so do your expenses! A 2% expense ratio means you're paying fees on fees, year after year. This compounds to devastating losses.
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The Math Never Lies
Even a 0.5% difference in expense ratio can mean 8-10% less wealth after 30 years. Over a typical retirement corpus of ₹1 crore, that's ₹8-10 lakhs gone!
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Take Action Today
Log into your mutual fund account, check your portfolio, and switch regular plans to direct plans. Most AMCs make this process seamless and instant.
Frequently Asked Questions
What is expense ratio in mutual funds?
Expense ratio is the annual fee charged by mutual funds to manage your money. It includes fund management fees, administrative costs, marketing expenses, and distributor commissions. It's deducted daily from your NAV and directly reduces your returns.
How much difference is there between direct and regular plans?
Direct plans typically have 0.5% to 1.5% lower expense ratios than regular plans. This difference exists because direct plans don't pay distributor commissions. Over 20-30 years, this "small" difference can mean 20-30% more wealth in your pocket!
Is a 2% expense ratio bad?
Yes, 2% expense ratio is considered high for most equity funds. When you're expecting 12% returns, paying 2% means you're giving away 16.67% of your gains to fees! Index funds have expense ratios as low as 0.1-0.3%, while good active direct plans charge 0.5-1%.
Should I switch from regular to direct plans?
Absolutely! If you're investing without an advisor's active help, direct plans are a no-brainer. The switch is free, takes minutes online, and can save you lakhs over your investment lifetime. There's no downside—same fund, same manager, lower fees.
How is expense ratio calculated?
Expense ratio is calculated as (Total Fund Expenses / Total AUM) × 100. It's deducted daily from the fund's NAV. For example, if NAV is ₹100 and expense ratio is 1%, you effectively pay ₹1 per year. SEBI caps expense ratios: 2.5% for equity funds (first ₹500 Cr) and 2.25% for debt funds.
Do index funds have lower expense ratios?
Yes! Index funds are passively managed, so they have much lower expenses—typically 0.1% to 0.5%. Compare this to active equity funds charging 1.5-2.5%. This cost advantage is why index funds often outperform actively managed funds over long periods.
Can expense ratio change over time?
Yes, fund houses can increase or decrease expense ratios within SEBI limits. Typically, as AUM grows, expense ratios decrease due to economies of scale. Always check your fund's current expense ratio annually—it's mentioned in the factsheet.
What's a good expense ratio for equity mutual funds?
For equity funds: Direct plans should be below 1%, ideally 0.5-0.8%. Regular plans below 1.5% are acceptable if you need advisory. For index funds, aim for below 0.3%. Remember, every 0.1% saved compounds to significant wealth over decades!
📚 Learn More: Essential Reading
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Index Funds Vs Active
Master the fundamentals with expert insights and real-world examples