Let me start with the number a distributor is supposed to bury: ₹12.5 lakh. That's roughly what a regular mutual fund plan costs you over a direct plan on a ₹10,000 monthly SIP held for 20 years, if the expense-ratio gap is about 1%. I'm an AMFI-registered distributor. Regular plans are how PlusFinance earns. And I'm opening with that number because if you find it on someone else's blog instead of mine, I've already lost your trust — and I'd deserve to.
So let's do the math properly, and then let's have the harder conversation about when paying it makes sense and when it doesn't.
The actual 20-year number
Take a ₹10,000 monthly SIP for 20 years — ₹24 lakh invested in total. Assume the underlying equity portfolio compounds at 12% a year before the cost difference (an assumption, not a promise — equity has done this over long stretches historically, and it has also done much worse over shorter ones).
In a direct plan earning the full 12%, that SIP grows to roughly ₹99.9 lakh. In a regular plan where the extra ~1% expense ratio drags your effective return to 11%, it grows to roughly ₹87.4 lakh. The gap: about ₹12.5 lakh. Not a rounding error, not “marginal.” Half of everything you invested, again, gone to the cost difference. Anyone who tells you the regular-vs-direct gap is too small to think about is either bad at compounding or paid not to mention it.
That number is why our mutual funds page says, in writing, that if you can manage your own investments we'll tell you so. This post is me telling you how to know.
Who should go direct — plainly
Go direct if all of these are true: you can pick funds without chasing last year's winner, you rebalance on a calendar and not on a mood, you've held equity through at least one real drawdown without selling, and your portfolio is simple — a couple of index funds, maybe a flexi cap, mapped to goals you've actually written down. If that's you, a regular plan is a tax on discipline you already have. Switch. I've told exactly this to clients' adult children who were starting out with a single Nifty 50 index SIP, because selling them a regular plan would've been indefensible.
What the 1% actually buys — and the one number that decides it
Fund selection, goal mapping, annual rebalancing — those matter, but they're not where the money is. The money is behavioral. In February 2025, mid-way through the correction that took the Nifty Smallcap 250 down roughly 25% from its September 2024 peak, I spent more time talking clients out of stopping SIPs and selling out than I spent on everything else combined. (One of those conversations got its own post — it's the companion piece to this one.)
Run the counterfactual on just one panic exit. A client with a ₹10 lakh equity portfolio sells near a bottom, waits for “things to settle,” and buys back after a 20% rebound — a completely ordinary sequence, I've watched do-it-yourself relatives of clients live it. That round trip costs about ₹2 lakh, permanently. The 1% expense-ratio difference on that same ₹10 lakh is about ₹10,000 a year. One prevented exit pays for two decades of the regular-plan premium. Two prevented exits over a 20-year investing life, and the ₹12.5 lakh gap I opened with has been earned back with room to spare.
The catch — and this is the part the industry mumbles — is that the 1% only earns its keep if the advisor actually picks up the phone during a fall and tells you not to sell. A distributor who set up your SIP in 2021 and hasn't called since is collecting the fee without doing the job. If that's your current arrangement, going direct isn't just cheaper, it's strictly better: you're getting zero coaching either way, so stop paying for it.
The honest decision rule
Ask yourself one question: in March 2020, or in February 2025, what would you have done? Not what you'd like to think — what you actually did with whatever money you had invested then. If the answer is “nothing, I kept the SIPs running,” you're a direct-plan investor and you should be one. If the answer is “I sold,” or “I didn't have money in the market then,” the ₹12.5 lakh question isn't regular vs direct. It's whether the person you're paying will be on the phone with you at the bottom. Judge us — or anyone — on that, because that's the only thing the fee is for.
The projections above are illustrative, use assumed rates of return, and aren't a forecast — actual fund returns and expense-ratio gaps vary by scheme. Mutual fund investments are subject to market risks; read all scheme related documents carefully. Past performance is not indicative of future returns. This is educational content, not a personalised recommendation.