Difference Between Stocks and Mutual Funds
As the red blood cells contain hemoglobin and transport oxygen. Similarly, the stocks supplies funds to the market for their capitalization. White Blood cells protect the body from infections. Similarly, Mutual Funds protects the market from downfall. Both Mutual funds and stocks are very distinct concepts and prospective the new investor clan often confound these to be similar. If anyone is prospective about the financial market entrance, he/ she has these options to put their funds in. One can choose to park their in equities straightforwardly through the stock market or one can choose the other way out of investing in equities through the mode of mutual funds.
“All the Financial Market’s a body,
The Finance’s a blood,
And all the mutual funds and stocks merely white and red blood cells.”
Shares or stocks are floated by the corporates through Initial Public Offer to raise money for expansion and other operations. The stocks are bought or sold through a trading account. Depending on future goals, any investor invests in ventures by buying their stocks for some period. The investor gets the benefit in the form of enhancement of value of the stock.
Mutual funds are an investment vehicle that pools money from different investors and invest in various assets such as equities, bonds, money market, currencies, derivatives etc. These investment are managed professionally. One can invest in the mutual funds either in the lump sum mode or the SIP mode. The returns generated on mutual funds are distributed in proportion of the units held by the investor.
Difference between Shares and Mutual Funds
In mutual funds, the funds are pooled by the team of professionals and invested in the securities of different companies. It leads to diversification of investment. This type of assortment is not possible with the investment in stocks directly.
Investing directly in shares is a tedious responsibility as a lot of analysis of a venture is to be done, say finding the price worth or future prospects etc. The professional research is done in Mutual funds before investing.
Investing in shares of a firm, investor becomes a part of their growth story and will get dividends as the company performs well. Investing in Mutual funds, purchasing the units, investor is connected to the average growth or progress of all the ventures involved.
Investing in shares exposes to the risk of the particular company, hence it’s more risky. Whereas in mutual funds, the risk is mitigated with the help of bouquet of diverse stocks.
Investing in shares requires good research of the companies which is time consuming. Contrarily, mutual fund has easiness and simplicity attached to it. Because they are maintained by the fund managers.
The basic requirement to invest in shares is Demat Account for the purchase or sale of securities in the Indian financial market. One can invest in Mutual funds directly.
Mutual funds gives higher returns if invested for a longer period of time. With the right strategy of buying, selling or holding any stock, one can earn high in short period as well.
Trading in shares involves brokerage whereas mutual fund investment includes management fees, entry load, exit load, etc.
What to choose?
A common dilemma which all the prospective investors have, is to choose which one is the better. The fact remains that both these avenues are distinctive from each other. One must choose which suits risk appetite and financial goals. Check your risk appetite at VSRK and our executives will help you take the right investment decision.
Therefore, selecting any justified investment will be based on individual’s preference, financial goal and style of investment.
Every investment avenue is favorable in its own way. If selection is puzzling, one is free to contact VSRK. Our professionals help you in selecting the best mutual funds for investment. In addition, you can open a Demat account with us and invest in shares on the basis of our regular research reports.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing