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An investment is an asset or item acquired with the goal of generating income or appreciation. An investment always concerns the outlay of some capital today—time, effort, money, or an asset—in hopes of a greater payoff in the future than what was originally put in.
Investing can be a tricky business and can confuse you immensely as to which is a better investment, Mutual funds or Direct Stocks. But with Fipro, the best financial advisor in Bangalore, this task has also become easy.
Their team of knowledgeable and qualified professional’s researches and bring you the pros and cons of both the investment for you to understand and decide.
But which is better, Mutual Funds or Direct Stocks? Let’s have a look. Some points to keep in mind while investing and deciding which is better:
1.Risk and Return: Individual stock purchases are a high-risk – high return proposition. Even though Equity mutual fund schemes have a higher risk due to the asset class they invest in, they have a diversified portfolio. Thus, by investing in mutual funds, you end up avoiding scenarios of negative returns.
2. Management: You solely rely on your research, knowledge, and skills while making an equity investment, which may or may not be adequate in all market scenarios. All of these drawbacks are not present with mutual fund purchases. Mutual fund houses have experienced financial experts who are fund managers and take care of your investments.
3. Diversification: A well-diversified portfolio should include at least 15 to 20 stocks but that might be a huge investment for an individual investor. With mutual funds, investors with little funds, as low as INR 1000, can get access to a diversified portfolio.
4. Cost: Due to the economies of scale, mutual funds attract lesser transaction costs when purchasing shares and therefore, pay lower brokerages as compared to individual investors. You can also save the annual maintenance charges on Demat accounts as you do not require it while investing in mutual funds.
5. Investment Style: When you invest in stocks directly, you have to do your own research, based on the knowledge of which you enter and exit the market. In case of mutual funds, you do not have the freedom to choose or transact in stocks or any assets as for that matter, during the time period of investment. The fund manager does all the investment, tracking, and management on your behalf which makes you a passive investor.
6. Investing / Trading time: Stock can be bought at any time during the exchange trading hours which start from 9:15 a.m. to 3:30 p.m. during which the transactions happen at the existing price. In the case of mutual funds, they can be bought or sold only once and at the day’s end after the NAV is finalized.
7. Tax Benefits: Mutual funds offer you the option to save taxes and can help you save up to INR 1.5 Lakhs under Section 80C of the Income Tax Act, 1961 by investing in tax-saving mutual funds. There is no such option to save tax while investing in stocks.
At Fipro, they make sure to listen, understand and acknowledge every client with what they need and what is best for them. Fipro is truly one of the best financial advisor in Bangalore giving you the safety and assurance that you require with your investments.
