1. Existing investors, tempted to move from Regular to Direct plans, need to tread with caution, because there are costs involved, as well as whether the difference in returns is large enough to forego the services of an intermediary.
2. Making a Switch is simultaneous redemption and purchase involving STT, possible exit loads, and Capital Gains tax too.
3. Whether you should go for Direct plans depends entirely on services your fund advisor offers and whether you can fully substitute them in Do It Yourself mode.
4. If you're sure, then switch ONLY when you have surpassed minimum tenure in which Exit load and Short Term Capital Gains Tax apply, by stopping Regular plan's SIPs and STPs, and activating them in Direct plan of the same scheme.
5. All new allocations can then be done systematically in Direct Option funds only for the remaining earning years.
6. During online transactions in Direct plans, an investor uses Direct option instead of a distributor's ARN code.
7. This facility is sometimes there in distributor's website, otherwise it can be activated by logging on to MF's website directly.
8. You can now redeem 1-year+ Regular Option funds systematically (or STP into Direct Option of same funds if you prefer them), and reinvest proceeds to Direct Option funds by SIPs (never lumpsum) over next 2-3 years for rupee-cost averaging of your investment.
9. During redemption / STP process, besides grandfather clause available on all units bought till 31st Jan'18, you should also avail full tax-free benefits up to an aggregate equity LTCG of 1 lakh in each financial year, after which 10% LTCG tax kicks in.
10. Any lumpsum redemption, with LTCG or STCG, should be avoided and opted only if you need money at short notice as a last resort, or for rebalancing windfall gains in any of your funds.
11. During this exercise, your money still remains invested at all times, albeit in two Options for a couple of years more, so you aren't missing out on the power of compounding.
12. Don't switch Non-Equity funds as tax incidence is very high compared to the benefit, so start fresh Direct plan SIPs, stop old SIPs and redeem them after 3 years.
13. While cumulative higher returns, due to lower expenses, of Direct Option funds is significant in the long-term, removal of Regular Option funds declutters your portfolio too.
14. Do remember that going Direct is a compromise on convenience to some extent, especially if your fund advisor is spending time with you and making efforts in fund selection, else for savvy investors, Direct plans help.
15. At the end of the day, however, it is your call to make for your money.
2. Making a Switch is simultaneous redemption and purchase involving STT, possible exit loads, and Capital Gains tax too.
3. Whether you should go for Direct plans depends entirely on services your fund advisor offers and whether you can fully substitute them in Do It Yourself mode.
4. If you're sure, then switch ONLY when you have surpassed minimum tenure in which Exit load and Short Term Capital Gains Tax apply, by stopping Regular plan's SIPs and STPs, and activating them in Direct plan of the same scheme.
5. All new allocations can then be done systematically in Direct Option funds only for the remaining earning years.
6. During online transactions in Direct plans, an investor uses Direct option instead of a distributor's ARN code.
7. This facility is sometimes there in distributor's website, otherwise it can be activated by logging on to MF's website directly.
8. You can now redeem 1-year+ Regular Option funds systematically (or STP into Direct Option of same funds if you prefer them), and reinvest proceeds to Direct Option funds by SIPs (never lumpsum) over next 2-3 years for rupee-cost averaging of your investment.
9. During redemption / STP process, besides grandfather clause available on all units bought till 31st Jan'18, you should also avail full tax-free benefits up to an aggregate equity LTCG of 1 lakh in each financial year, after which 10% LTCG tax kicks in.
10. Any lumpsum redemption, with LTCG or STCG, should be avoided and opted only if you need money at short notice as a last resort, or for rebalancing windfall gains in any of your funds.
11. During this exercise, your money still remains invested at all times, albeit in two Options for a couple of years more, so you aren't missing out on the power of compounding.
12. Don't switch Non-Equity funds as tax incidence is very high compared to the benefit, so start fresh Direct plan SIPs, stop old SIPs and redeem them after 3 years.
13. While cumulative higher returns, due to lower expenses, of Direct Option funds is significant in the long-term, removal of Regular Option funds declutters your portfolio too.
14. Do remember that going Direct is a compromise on convenience to some extent, especially if your fund advisor is spending time with you and making efforts in fund selection, else for savvy investors, Direct plans help.
15. At the end of the day, however, it is your call to make for your money.