Stocks VS Mutual Funds
Many people start investing seriously but they don’t know where to invest their money, whether they should invest in Stocks or in Mutual funds.
In stocks, you can earn good profits but if you invest without knowledge then you can get a huge loss also. You might have heard that if you had invested Rs 1 lakh in Britannia company in 2005 then the value of that stocks would be Rs 80 lakh Or if you had invested Rs 1 lakh in page industries in 2005 then the value of those stocks would be Rs 1.2 crore. But if you have invested that same amount in mutual funds then the value would be 8 lakh rupees.
But the problem is that these companies have grown now, and if we knew before that these companies would grow that much then everyone would invest in them. Therefore it is an incomplete comparison because many people would have invested in some companies which are completely bankrupt now and they would have given up on the stock market.
So in today's blog, we will learn How To Earn More Wealth By Taking Minimum Risk.
If you belong to a Middle class or Poor family then in order to become rich then you have to do Business only because it is very difficult to become rich by doing a Job. But everyone can’t start their own business but everyone can invest in a business by investing in the stock market and become rich.
To understand where to invest you should know the difference between stocks and mutual funds.
Stocks
If you invest in stocks then you have full control and it’s your choice when and how much to buy or sell a company stock. If you are confident in a company then you can invest all your income in a single company. Stocks do not depend on a country's economy and stocks can grow when the economy is not growing.
If you invest in mutual funds then you buy a readymade portfolio of stocks and you don't get the freedom to customize your portfolio. That means if a country's economy grows then only your mutual fund will grow.
If you invest in stocks then you will get dividend income and after 10-15 years you can easily retire on your dividend income. But in India, there are very few dividend-paying mutual funds.
If you invest in stocks then you have to pay a very minimum fixed fees but in mutual funds, you have to pay fees on the basis of %. For example, if you invested Rs 1 lakh in stocks and have to pay 1000 rs for maintenance then you are paying 1% of your amount invested but after some years your amount grows and becomes 10 lakh and still, you are paying 1000 rs for maintenance i.e 0.1% of your investment. But if you invested Rs 1 lakh in a mutual fund and have to pay 1000 rs for maintenance then you are paying 1% of your amount invested but after some years your amount grows and becomes 10 lakh then you have to pay rs 10000 for maintenance.
Mutual Fund
If you invest in a mutual fund then you will get a readymade portfolio of some famous companies and if you invest 1000 rs in a mutual fund then your 1000 rs will be distributed to all companies which are in your portfolio.
If you have invested in a large-cap mutual fund then you have already diversified your portfolio. You have to keep in mind that you should not invest in 5-6 mutual funds because you are wasting your time by investing in more mutual funds.
In mutual funds you can invest through SIP ( systematic investment plan ) and in SIP you don't have to take the stress from the market, you just have to pay monthly instalments and you will get an average return at the end. Paying instalments is not necessary for SIP; you can stop your SIP whenever you want. SIP is a safe option for those who are new to the stock market and cannot give much time to the stock market.
Conclusion
If you are interested in the stock market and are ready to give your time then you can invest in stocks and buy them i.e put all your eggs in one basket and watch it carefully.
If you are not interested in the stock market and don't want to give time then you can invest in mutual funds and can get a readymade diversified portfolio i.e to put your eggs in different baskets.
0 Comments