Ch.6 · ARN and EUIN Rules · hard
An investor invested ₹1 lakh in the Regular Plan of a scheme with TER 1.8%. The Direct Plan of the same scheme has TER 0.8%. After 10 years at a gross return of 13% CAGR, approximately how much more does the Direct Plan investor earn?
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EXPLANATION
At 12% net (13% minus 1% TER difference), ₹1 lakh grows to ~₹3.1 lakh over 10 years vs ~₹2.7 lakh at 11% net. The Direct Plan investor earns roughly ₹35,000–₹40,000 more. Over longer periods or higher investment amounts, this difference becomes very significant due to compounding.
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