Investment is no longer a far-fetched idea. Though more people are trying their hands at investments, many tend to overlook the small but most significant details about certain investment plans and suffer great losses at the end because of their ignorance. The direct plan is one of such investment concept that demands thorough knowledge on the investor’s part before investing.
A direct plan is a buzzing concept that allows the investors to purchase a scheme directly from the functioning mutual fund, either online or through an authorised branch. The concept helps the investors save on commission or service fee.

Why direct plan is not recommended without proper knowledge?

The USP of a direct plan is its ability to offer a higher rate of returns when compared to the other regular plans. This USP draws a large number of investors towards it, who in the zeal of earning higher returns, overlook the bigger picture.
The following reasons pin-point, why one should not venture in direct plans without proper knowledge:
Most investors lose money because they tend to overlook the terms and conditions of their chosen plan. In the haste of adding top-rated schemes on their investment portfolios, they forget to educate themselves about the basics of mutual funds.
Not all financial advisors will offer an unbiased opinion when it comes to choosing the most suitable instrument of investment for you. You may save on commission but will the unprofessional advice that you receive be enough to cushion you from risk and loss?
Don’t lose your hard earned money by believing everything that you hear. When you turn to people, they will either tell you to pick up a top performing scheme or to invest in every category of schemes to earn more returns. Some will make you believe in the benefits of timing of the market while most will just recycle what they have heard from someone else. Why risk your money on what others have heard and said? Different schemes need a different approach.
A half-baked idea about investment schemes and market situations will not be favourable for your investments. A bias advice and your own ignorance can drive you towards potential loss and pull you away from the long-term benefits of equity funds.
If an investor is not well-informed, they will lose confidence in making investments in the long run when met with losses or setbacks. In the ply of saving a nominal service commission, you may lose out on a chunk of their hard-earned money and all because of lack of direction and proper guidance.
How to gain the required knowledge?
Learn the basics of investment
Start by opting a goal-based plan
Gauze your risk appetite before investing
Select a plan that matches your risk profile
Time your investment well
Stick to a maximum of 4-5 schemes at any given time
Stay away from the sector funds you lack knowledge in
The best way to educate yourself about investments is by seeking the help of a reliable and professional financial advisor. Contact us to help you understand and plan your investments effectively.