If I invest 5000 every month in SIP the amout collected by broker @1% (1% of 5000 is Rs 50) is same as the your monthly subscription charges. In addition we need to pay annual charges of Rs300. The If I am investing in Direct MF through Zerodha it will be a loss to me naa. But in your calculation you showed that after 25 years I will be loosing Rs 28L if I invest Rs5000 every month in Regular funds. How come?
Answered in the link below:
Two things to note
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Rs.50 is a fixed fee and it doesn’t compound. Even if your portfolio growth to 20 crores. you will still be charged Rs.50 PM.
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This is the most important part. Let’s say you invest Rs.100000 and your investment grows by 10%, your corpus will be 1100000. Let’s assume the expense ratio of a fund is say 2%. Now you would be excused for thinking that the calculation would be Rs.1000000-2% = Rs.980000. But this is wrong. Expense ratio will eat into your corpus, it will be charged on 110000-2% = Rs.22000. Now, this is deduced year in, year out.
So. on a monthly SIP of Rs.5000 for 25 years and assuming a conservative return of 12%
Mutal Fund XYZ (Direct - 1% expense ratio) You investment corpus would be Rs.7474013
Mutal Fund XYZ (Regular - 2% expense ratio) You investment corpus would be Rs.6247507
Difference Rs.1226506 or 16%
Rs.50X300 months (25 years) Rs.150000
The point is Rs.50 is a trivial charge in the long run. Hope I’ve answered your question.