'Profit is a reward of risk.' Prof. Hawley's statement is accurate from the business world to the investment market. Talking about investing in the stock market, if you are knowledgeable and understand the movements of companies, you can directly invest in shares that can give you better returns. However, it is a difficult task for a common investor to do research on companies to invest in shares. Common investors simplify this work of equity mutual funds. Equity mutual invests not in one share but in shares of all companies. Because of this, the loss from one company does not affect your investment portfolio.
Advantages and disadvantages of investing directly in the stock market:
If investors invest directly in the stock market, the advantage is that it increases the likelihood of higher returns as well as more losses, but there are also dangers. Investing directly in the share is fine in terms of higher returns, but sometimes the risk of loss increases and may incur huge losses. If an investor invests directly in the stock market, he has to pay constant attention to his portfolio. Those who are not aware of the stock, how to buy the shares, invest in mutual funds through professional management. Everything is under discipline. Go through SIP every month. Yes, if one has full time, if an investor knows about the market, he has a lot of time for research, then he can go for direct shares, otherwise, mutual funds are the best option.
Invest for long term
Many times it happens that investors expect a hefty return from the stock market very quickly, while the market does not go according to our thinking, so invest in the stock, you have to have a little patience because you can get a good return when you wait.
The Fund manager has information
Professional fund managers manage if you invest through mutual funds. The fund manager has a good understanding of market fluctuations. Also, the investment portfolio is diversified and also reduces the risk of fluctuations. If an investor goes for investment in direct shares, he should be fully aware of the stock market. He will have to do research, it is difficult for new people, so it would be better to invest in mutual funds through professional management. The professional manager is aware of the current market situation, and the shares as to how they share are being performed. So, the path of mutual funds is correct.
Can start an investment with a small amount
In general, mutual funds can start investing from Rs. 500. But there are some companies which facilitate starting investment from Rs. 100.
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