The market is 30% low as of now and this is the time where everyone needs to stay back at home to cope up with a very effective initiative by the government i.e. lockdown with the help of which the nation can unanimously solve the very issue. But this self-quarantine period must not be a wastage of time rather you should make the most of this time to learn something new. And what else can be more effective in learning than using this time to trace the moves of an ideal investor? The investors might have tons of questions flooded in their minds as of now. This is why there is a content brought to you with the help of which you can get all your queries cleared about the fact that what should be the best investment- mutual funds or stocks? So stay tuned to find out.
Knowing what stocks and mutual fund are
Stocks are the shares of a company. The owner of a company when it is not sufficiently able to raise the investment of its company lets the stocks out in the market for people to buy. Hence, if you like the business strategy of a company, then you can make the most of your money by putting them in the stock of the company. But the most important fact that lies beneath the investment in stocks is that the investor must make a thorough research about the business strategies of the company further.
On the other hand, if we talk of mutual funds, then they are the asset management company that collects the money of the investors and then puts their money in the asset of their choice. One of the major differences between the stock and the mutual fund investment is that the stock investing is independently your decision whereas, on the other hand, the mutual fund investment is the one where the company decides on the asset that should be invested which can potentially generate good returns. Hence, once you receive great returns from the fund manager, you should not worry further.
Comparing the expense:
For this, one requires to create an account to receive brokerage services and the broker might even charge you more for the sake of management of companies. But the major risk that is associated is with the company which you feel is offering its share at a lesser price. The expense might even exceed the amount you make out of this hectic procedure.
On the other hand, in the case of a mutual fund, one also needs to create an account. You can choose your mutual fund from the huge lists that are provided to you on the internet. The expense is lesser in this case and the return of investment in potentially more.
Which one is better?
To come to this point, we can take an example that can help us vividly understand the matter. Let’s assure that there are two investors named A and B. A does not know much about the stock market. He neither wants to put the efforts of making a thorough research. Then he or she can directly reach out to put money in the mutual funds. But let talk about investor B who takes interest in the stocks. The person has the expertise and makes research about companies regularly. In this scenario, he or she must put his or her money in the stocks of the company about which he or she is sure. But in this case, B must know which company has micro risks. He or she must have thorough knowledge about the business of the company. Only then his or her return on investment can be safe.
Hence, if you are investor A who does not want to research and has no knowledge about the best assets to put the money in then you must go with the mutual funds but if you share the kind with B who has some knowledge about companies and their business and is very sure about the research, then you should put your money in the stocks. The bottom phase of the market has unpredictable duration as of now and hence, the only suggestion that can be given is that one must not put all his or her money at once. Try to make a thoughtful decision so that you can escape incurring fatal losses.