1% doesn’t sound like a lot, but in real terms, it is. For instance, if a 35yearold investor were to put Rs. 10 lakh in a 1% annual commission bearing regular plan of a mutual fund, which grows at 8% a year, his investment would be worth Rs. 76 lakh when he retires at 65.
On the other hand, if he switched to a direct plan of the same mutual fund and cut out the 1% annual commission, his investment would grow to Rs. 1 crore over the same period. What would he end up losing as 1% commission each year to his adviser? A whopping Rs. 24 lakhs!