{"id":3912,"date":"2018-12-05T10:21:43","date_gmt":"2018-12-05T04:51:43","guid":{"rendered":"http:\/\/capitalante.com\/?p=3912"},"modified":"2020-05-05T11:17:08","modified_gmt":"2020-05-05T05:47:08","slug":"investing-in-equity-mutual-funds-versus-investing-in-stocks","status":"publish","type":"post","link":"https:\/\/capitalante.com\/investing-in-equity-mutual-funds-versus-investing-in-stocks\/","title":{"rendered":"Investing in equity mutual funds versus investing in stocks"},"content":{"rendered":"

After making an analysis of common myths about the stock market<\/a> <\/span>and why you should invest in equities, the next jargon you have to solve is how you can invest, directly in equity or via mutual funds i.e. investing in equity mutual funds versus investing in stocks.\u00a0You can invest your money either via mutual<\/g> fund or you may open a demat<\/g> account and invest in direct equity. In this column, we will analyse<\/g> which is the better option for you between direct equity and mutual fund i.e. <\/a>Investing in mutual funds vs. direct equities\u00a0<\/a>because at the end of the day both invest in the stocks or equities.<\/span><\/p>\n

Investing in equity mutual funds versus investing in stocks<\/span><\/h2>\n

Knowledge required<\/strong><\/span><\/h3>\n

In the case of direct equity investment, an investor needs to gather sufficient knowledge about the stock market and the stocks or shares he wants to buy. Many investors invest in direct equity without doing proper fundamental analysis, technical analysis, qualitative analysis, balance sheet, profit and loss account etc. and wait only for one year or two years to get satisfactory returns. Then, in most of the cases, these investors make a loss because of their lack of knowledge and proper analysis. <\/span><\/p>\n

On the other hand, what intelligent investors do is that they check the fundamentals, technical, qualitative factors of stocks they want to invest and then invest. If you intend to invest via direct equity, you need to read a lot about the stock or company. Always you need to keep a close eye on the stock\u2019s quarterly as well as annual results. You should make an investment strategy in accordance with your risk appetite and goal tenure.<\/span><\/p>\n

In the case of Mutual Fund<\/strong><\/span><\/h6>\n

If you invest via mutual funds, you neither need to read anything about a company nor need you to keep an eye on that company and its movement. The only thing you are to do is that just go to any Mutual fund company or a Mutual fund agent. Then the company or the agent will do all the things on behalf of you. You can start investment either via Systematic Investment Plan or lump sum investment. Then, the respective fund manager will invest your money in around 25-30 companies to diversify the risk. Thus, you can lessen the risk factor and generate better returns in the long term. <\/span><\/p>\n

If you have long-term horizon you may invest in small-cap or mid-cap mutual funds which yield better returns over large-cap mutual funds. You do not need to have a cautious eye on quarterly or annual results of the respective companies. You can pick midcap and small-cap stocks after proper analysis of a stock\u2019s fundamental i.e. debt ratio, compounded sales growth, profit growth, P\/E, Balance sheet and Profit & Loss account. Whatever, if you are unable to do anything, the fund manager will manage your investment accordingly.<\/span><\/p>\n