Mutual Funds Or Stocks? Which One To Choose?
Everyone thinks of investing their money expecting good returns. There can be a variety of options available to choose from, that promises fast returns. Few invest in mutual funds, fixed deposits, and gold while others can choose to trade in stocks. No matter whether you invest in the stock market or in mutual funds, the output depends on how much risk you are ready to take to get good returns and how you measure your good returns. In this article, we will go through the basics of both mutual funds and stocks.
The investors who choose Mutual funds find these four features interesting:
- Professional Management
Mutual funds are usually managed by professionals who handle all the operations. These managers are well experienced in the domain hence aware of all the benefits and risks when selecting the investments for the funds. They manage the entire buy and sell operations reducing the stress on investors.
Mutual funds are usually many diversified portfolios as they own a variety of stocks. So even if a few of them did not incur good returns, they might not affect the entire mutual fund. The mutual funds can hold investments in different industries with a variety of assorted sized companies. An individual investor might find it difficult to diversify his portfolio to such an extent.
Many investors prefer individual stocks over mutual funds as the stocks also have a few features that the investors find attractive:
- Hands-on Investing
- No Fees
- Greater Upside Potential
Investing in individual stocks needs investors to pay the brokerage fees. The mutual funds also need to pay fees which sometimes may be quite significant to drain your mutual fund returns. Mutual fund fees may be small but in long run might affect the overall returns.
Mutual funds are highly diversified that prevents them from incurring huge losses but at the same time, it holds them down. In stocks, you can do risky trades that can incur huge profits. Check this full report about how Bitcoin Loophole is helping investors to trade easily.
Mutual funds invest in various companies at a time hence investors who want to know where their money is going won’t be able to track it precisely. For this reason, few investors might feel comfortable investing in individual stocks, as compared to mutual funds.
Room for both:
Mutual funds usually work very well for funding retirement strategies. While those who want to take risks for greater returns can opt for stocks.