What forms the best way to invest – mutual fund or shares.
Well if you seek my opinion, I feel it all depends on your own requirement and
your appetite for risk! Mutual funds are
passive form of investing and stocks active way to be in the market. But there
are benefits associated with either of them in the same manner as there are
disadvantages.
For a newbie, it is always better to go for mutual fund, as
it gives yo the option to beat the market as it is constituted of diverse
stocks. The same advantage mitigates the risk element considerably in mutual
fund investment. Add to it the variety of flavor they present to the investor. From sector based funds such as tech, financial, retail or energy to commodities
to foreign indexes, mutual funds are known for their diversity.
Cut to investment in shares or
individual stocks, you know that you’re up for some more fun in the stock
markets as the risk factor associated here is more. And since the risk element
is more, you know there are chances for you to make more money! It is in fact a
a high risk, high reward affair. Let’s assume for example that you have
invested Rs 10,000 in the stocks of a particular company! No win case of
bearish market, there would be a complete loss of the investment while on a
bearish one, you would end up making handsome profits. This would not have been
the case in the safe and secure world of mutual funds.
So if you are comparing between
stocks and mutual funds from investment point of view, then you need to understand the individual requirement
of the investor and proceed accordingly.
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