Mutual Funds vs. Stocks

In stocks you can make 100 % profit in your investment in a month, in case of mutual funds, you can expect a gain of approximately 18% and an investment in blue chip companies can make you earn a profit of 40% per month. Then, what should you prefer? Follow the lines below to define your investment levels in mutual fund and stock markets. 

Both mutual funds, and stocks investment in stock markets are good to make profits. In fact, the level of making a quick money differs, they are distinctive in the nature of their operations. However, an investor should understand the basic differences before putting money into it. 

A stock investment involves money invested in a specific company shares, while in a mutual fund investment, you will have invested in more stocks and assets that belong to more than one company. 

Mutual funds do hold a higher degree of flexibility and are said to be a safer investment than stocks, they allow you to diversify into funds depending upon your preferences in taking risk factors. You are free to opt risks depending upon your appetite, such as equity funds: debt funds. 

The fund managers follow a specific allotment as per your desirability, you can choose fund investment in the ratio: (Equity: debt) in form of ( 90:10)/(80:20)/(60:40)/(50:50). You can select the fund ratio as per your permissible risk zone. The stock exchange differs in providing such a cushion given by the mutual fund managers. 

In the stock markets, you will observe the stock price opens at a fixed price and closes at a fixed price, while the stock keeps varying throughout the trading session. In mutual funds, you will find the fund managers calculating the net asset value only once, after the stock markets close down after 03:30 pm. 

Stock markets are the secondary markets where buyers/sellers do transact under the guidelines of the stock exchange and a specific stock can be bought or sold at varying prices. While in the mutual funds, you are allowed to buy in the form of units of a MF at a measured price of the net asset value in a day. 

In stock markets you are permitted to conduct different kinds of trades that operate in a set frame of conditions and are broadly classified as day trading, swing trading, delivery, option trading, futures and options trading. While in mutual funds, you do remain passive and enter to buy the units based on the day’s net asset value. 

Stock markets are highly risky, need a balanced approach, and discipline and patience are the key qualities the trading demands for, since you have an active participation in your invested securities and underlying assets. In mutual fund markets, the risk lies in the hands of the fund operating manager and you are never exposed to the trading environment. 

Where to Invest : Stock markets or mutual funds 

You must make investment in the stocks only after gaining a thorough knowledge on the ongoing stock business. In mutual funds, the overall performance of the fund is sufficient to judge your investment objectives. 

Stock involves quick money making, you can become a millionaire in a short period. Stock trading is highly risky, lack of proper knowledge on stocks and markets can make you a pepper. A calculated investment can keep you away from such risks in mutual fund investments. Therefore, you must select the nature of investment that makes you perform with ease.