Mutual Funds vs Stocks

Mutual Funds in India

For any person who is in the field of finance, stock market will seem the best way of investing. But how many people investing in stocks make a thorough study of the market? Moreover is the stock market very predictable?

These are the possible questions that worry any young investor who is prepared to invest a large sum.

Generally the stock market demands a constant study of the market by the investor. The study must not be confined within the performance of the specific stock in the past years; it must also take into account the performance of the company whose stocks has been bought. This course of study consumes a good amount of time and is not feasible for everyone to follow. Now here is where the mutual funds come into play.

Mutual funds are a lot safer investment vehicle than stocks.

Mutual funds do not mandate a considerable amount of investment. There are mutual funds in the market, which allow investors to start with a paltry sum each month. This displays how easily one access mutual fund investment irrespective of his/her level of income.

The most essential feature of the mutual fund is the professional management of the funds. The fund collected in a mutual fund is managed by trained investment professionals. These professionals are trained perform research on the investment type, select the securities and shall monitor individual funds. This saves the time of market study that an individual is supposed to spend, had he been in the stock trading.

We all are aware of the proverbial statement; greater is the risk, greater is the return. Mutual fund investment attempts to avert the risk through diversifying the investment across various financial products. Moreover the possibility of fluctuation in mutual fund is considerably less than in stock market. This is the reason of high upside potential of the mutual fund. Thus an investor is left with greater chances of earning more returns.

Finally, mutual funds have large sums of money to invest and often they trade commission-free and have personal contacts at the brokerage firms.

Thus although it is seen that investing in stocks can give more returns compared to mutual funds, yet mutual fund investment is suitable for averting risks. Mutual funds play a pivotal role in funding for retirement plans. It will be a wise recommendation to invest both in stocks and mutual funds with a suitable ration that is tolerably comfortable for an investor.