Is it better to invest in mutual funds or should I choose stocks?

Let’s face it. Investing is not as easy as it sounds. Many investors have to deal with the dilemma of choosing between mutual funds and stocks. To be honest, there’s no one way to answer this. The whole matter is subjective and one has to be very careful while answering the question. It would be like drawing a comparison between oranges and apples. If you genuinely like investing, always remember that you will be entirely responsible for your own picks.

But if you’re thinking of mutual funds to invest in now, then the fund manager will be taking the call for you. That’s why it is essential that you consider all the factors before choosing the right asset that can help you achieve financial goals. What can they be? Let’s read.

What does the market have to say about this?

If you have all the necessary experience and knowledge, having direct stock investments would be the best choice for you. But if you keep dabbling with stocks often or go to third parties for advice, make sure that you consider it carefully before making any kind of commitment. Stock investments are only suitable for people who are active.

Mutual funds however function very differently. Your manager will take care of your portfolio whether you have a good idea about your investments or not. Either way, you can make good cash too! Overall, they are suitable for investors who dont have enough time and need enough knowledge to understand the market and make quick decisions.

Diversification

One of the biggest principles of investing is diversification. This will help you reduce risk at all costs and balance your portfolio. Having a good portfolio will help you ride through the choppy waters and reduce turbulence as well. Having a variety of stocks from various sectors will give you the diversification you need. If you want to invest in stocks, you will get all the exposure you need.

But if you end up going to mutual funds, the cash shall be spent across various sectors. This happens because the portfolio of funds will help you invest in many sectors. It will also diversify your portfolio automatically and provide you with the opportunity to get bigger returns.

So what is the best option for you?

It’s important that you keep your mind open while investing in financial instruments. Though mutual funds are an excellent choice for building a portfolio, having the right investments will give you a whole inheritance you will feel thankful for later on.

If you are still confused about where to invest your funds, then its best to opt for a stock broker such as Motilal Oswal. They not only help with investment strategies but also offer services such as intraday trading, portfolio management etc. They also have a dedicated share market app where you can use all their services and manage your portfolio in one go.