ICICIDirect has revised its brokerage charges for Mutual funds Investments . Some time back SEBI abolished mutual funds entry load , In this post we will see the new charges by ICICIDirect and analyse if its good or bad . The new revised charges look good to me . In case you don’t know what is SIP , Read here
So ICICI Direct came up with this Rule . If your Mutual Funds portfolio with them is
Your Mutual Funds Portfolio Above 8 Lacs with ICICI
So , it means you can just invest through ICICI Direct website and your brokerage would be Nil and you wont pay any thing in charges .
Your Mutual Funds Portfolio is Below 8 Lacs with ICICI
You will have to pay lower of Rs 30 or 1.5% of the amount each time if you go for SIP . On a lump sum investment , you will pay Rs 100 .
Is it Good or Bad ?
If your SIP payment is High
This revised charge structure will be very good for you if you are making Higher SIP payments like 10,000 . In that case your charges would be Rs 30 each time , which is 0.3% , which is 87% cheaper than earlier cost (2.25% entry load) . Even with 5,000 SIP , your charges would be .6% , which is much better than what you were paying earliar and this all with the convenience of doing everything online yourself .
Read why SIP is best for salaried class people
If your SIP payment is Small
If your SIP payments are less than 1,500 , then your charges would be 1.5% , which is near 2.25% , what you earlier paid, you are still benefiting , but not to great extent . Now its you who have to decide
- if you would like to go with direct Mutual funds investing yourself (without any charge at all)
- You can find some other agent who charges less than 1.5%
- You are ok with 1.5% charges and comfort is more important to you .
Suggestion to people who have lot of Mutual funds in your portfolio
In case you have too much mutual funds in your portfolio and your SIP payment in each of them is small , the better thing would be to prune out most of them and consolidate your mutual fund portfolio to maximum 5 funds and better to more payment in each , for example if you have 15 mutual funds of Rs 1,000 each , change it to 4 mutual funds with 4k payment to each or Something like that . It will help in management of funds also and also help you reduce the charges .
There may be some other agent or web portal who are not charging at all for mutual fund investments through them . For people who are yet to open a Demat account and also looking for Mutual fund investments , Opening a ICICI Direct Demat account may be worth looking into .
What is most Important
Don’t try to put too much thinking in this , less charges are good , but its not the main thing , you must concentrate on your Asset Allocation and Portfolio Rebalancing and choosing a good mutual fund for you . So if you getting a good advice , its worth to pay good fees for that , don’t try to save that small amount just for saving it .
Please comment what do you think about this ? Do you know of some other alternative route through which the commission will be better than this .
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