IT pays to buy mutual funds directly from the fund house. Here's why.

You save money on the 'entry load', a deduction made by the mutual fund company from your invested amount and used to pay the agent's commission.

If you choose not to use the services of an agent, you can save anything between 2 to 6 per cent of your invested amount.

For instance, if you want to invest Rs 10,000, earlier (three months ago when you could not buy mutual funds directly from the company but only through its agent), the fund house would have deducted around Rs 200 (for the agent) and made a net investment of Rs 9,800 on your behalf.

But now, if you choose to invest directly from the mutual fund house, Rs 10,000 will be invested. There are three ways to buy a mutual fund, directly.

Visit the office, fill up the form, submit the documents and voila, you have saved 2 per cent. Remember that your bank and the mutual fund house, even if they belong to the same group, are separate entities.

For instance, if you want to invest in a mutual fund scheme from SBI Mutual Funds, you cannot go to the nearest branch of the State Bank of India. In this case, the State Bank of India will act as an agent for SBI Mutual Funds, and you will not save on the entry load.

Instead, head to the nearest SBI Mutual Fund office.

Read:

• Too broke to invest in mutual funds? Here's help
  
• Did you read the offer document before investing?

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e-mail: Kapildeo Singh

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