I opened a Zerodha account for my father earlier this year strictly for the purpose of tax savings investments of 1.5 L in a year as per section 80C. So far he was investing in PPF.
After making his investments of 1.5L on Coin I realized that it is becoming an expensive affair for this specific purpose.
As you know units in ELSS funds are in lock-in for 3 years and does not allow any transaction, so the recurring cost is as under:
Rs 300 (AMC) x 3 years = Rs 900
Rs 59 (50 subscription fee + 9 tax) x 3 years = Rs 2124
which sums up to a total of Rs 3024 in expenses for 1 year of investment i.e. an expense ratio of 2% on a total of 1.5L investment in a year.
This is quite an expensive affair when you can do it for FREE on Kuvera and Groww and MFUIndia. Moreover, you feel stuck with Zerodha for such an investment decision.
Suggestion -
No subscription fee for users who are just doing investment strictly for tax saving purpose.
If a user does not exceed 1.5L ELSS fund investment in a year, or if he does not invest in any other fund apart from ELSS, he shouldnât be charged Rs 59 per month.
The moment he exceeds the upper limit of Rs 1.5L per year, or if he invests in any equity/ liquid/ debt fund, he will be charged Rs 59 per month from that month onwards.
This will give users like my father a sigh of relief and also this will act as growth hacking for you to acquire new users who fall in the âinvesting for purely tax-saving purposeâ category. And the serious investors are being charged Rs 59 per month.
The expense is 1008/150000 =0.672% per year, not 2% as you mentioned. And if one invests 150,000 every year, then expense from 3rd year onwards assuming you continue to invest 150,000 every year will be 1008/450000 =0.224%. However, I do agree with the idea.
Also, we have to note the compounding effect of recurring Rs 59 per month.
One more thing, 1.5L total investment I considered as Lump sum done in the beginning of a financial year. If someone is investing in SIP then the lock-in period extends to 3 years from the last SIP.
My simple submission is - for 3 years units are locked, and you keep paying Rs 59 per month. This becomes an overhead.
now someone from zerodha going to school you about how great the app and platform and what are the holy benefit of investing threw coin.i also asked the same thing and they just ditched it by explaining other things.well i would say that we are fools that we choose to invest threw coin in the first place.if you just want to invest in a single fund house elss fund why not do it from the fund site itself.i mean itâs a simple process.even if you do it in paper form it is still more simple than the great coin.i am stuck in my three account and will exit from two in coming month.the platform is good if you are a active investor and trader and manage money more than 2-3 lakh.i am holding liquid fund more that 15 lacs in my account for which i have no problem paying the coin charges.but as soon as you start calculation on elss and that also 50k to 150k per year, your mind start to worry about the charges.because of the nature of fund.suppose once your fund holdings go in the losses what will happen then.from my experience if you just want to engage with one fund house or two just stay away from coin.go directly to fund site and invest from there.most of the big fund house also offering mobile app.to zerodha i would say that i am not related to any organisation and not a fund distributer.this whole thing i am saying as a user.when it comes to kite,i love the platform as it is one of user friendly and very light to use.they are doing great job with all the product they have but they need to think about this elss thing seriously.
This has helped us build a sustainable platformâ. For us it works out with even as little as Rs 50 because this is continuation to our primary business of allowing people to trade stocks. I know currently we are all spoilt by choice with all the cash backs and free offers fueled by VC money pouring into Indian startups. But this ainât going to last forever. When it stops, only platforms that have a revenue model will survive. It is important for you to be cognizant that unlike an online shopping portal where you are there only for that transaction, your relationship with a platform for investment is much longer.
We are able to do this at Rs 50 only because this is not our primary business and because we sell mutual funds in demat. Yes you have an option to chose someone who is offering for free, but if that business doesnât have alternate revenue model, how will it survive. VC money wonât subsidize in the long run, and Indianâs donât like paying separately for advice.
Of course every subscription plan can be made to look extremely expensive. I pay tata sky Rs 1000 per month, but might have watched 30 mins of TV in last 12 months.
Coming back to your suggestion - yes, only 10 to 15% of our AUM is from ELSS, so yeah we could do it at 0, but at our scale it brings in a lot of complexity. We will have to change our billing module, we will have to find a way to market this in a different way. So suddenly pricing goes from a simple Rs 50 per month to something else. Similarly tomorrow another person might ask us to keep it free for debt funds. So yeah, it is quite tricky.
Also as a business, we donât want to play around with our pricing, what has helped us till now is keeping the pricing extremely simple.
I have gone through all the questions on the thread regarding Coin charges and have concluded the exact point as you have highlighted.
In short lets say I make an investment of 10000 p.m. in ELSS for only two years and stop my SIP after that then I will have to wait for next three years of my last SIP amd keep paying Coin Rs.59 p.m. even if I am not using the platform anymore i.e an amount of Rs. 3600. In essence with 10% average return after five years I will get Rs. 24000 - 3600 as the net profit. Above this I found there are some charges to dematerialize the MF as well.
Why not use CAMS then? Also a new platform called Clearfunds is offering a flat Rs. 199 one time subscription charge for direct MFs.
I pay tata sky Rs 1000 per month, but might have watched 30 mins of TV in last 12 months.