Which is better Stocks Investment or Mutual Funds Investment? I know this question has crossed your mind if not many times when you were still trying to figure things out as you open your first investments.
Many of our readers here have been asking the same question that is why I’m sharing this page.
Stocks Investment vs Mutual Funds Investment
Both investments are great and have potentials but knowing which is better for you depends on the following factors:
Not knowing about stocks or mutual funds means not knowing if you will profit or not. Knowledge is power.
Before you open a mutual fund, there are questionnaires involved although there are no right or wrong answers, the assessment will let you know what type of mutual fund suits you. Knowledge adds confidence. The more you know, the confident you are to succeed with your investments.
Before you buy stocks you can profit with, you must know how to trade, what type of strategy you will follow and what your objective is.
If you don’t know anything yet, invest some knowledge first. No worries, this website will help you.
If you believe you know enough then you can have either or both Mutual Funds and Stocks.
It is true that experience is the best teacher. As you invest, you learn a lot of things, not only lessons about how to manage your money or how the market works, you learn how to be rational and logical. You would no longer decide according to your emotions.
Experience teaches us it’s always better to diversify so having different investment is better and it minimizes risk. Thus, do not put all your money or more than 30% of it on one investment.
Every investment has risk. There is never a guarantee of income or gains.
If you are very conservative, go for mutual funds like Money Market Funds or Bond Funds. If you can take risks or you’re aggressive, having Equity Funds or investing on stocks would work for you.
Mutual Funds are managed by experts (fund managers). The allocation of funds would be invested on different money instruments and securities. Thus, joining a mutual fund means you mutually believe on the mutual fund’s strategy and objective that could mutually benefit all the investors of “the fund.”
On the other hand, when you invest stocks in the PSE, you are the one in control or the one who manages your investments.
If you can’t managed your funds well, join a mutual fund. If you want to be independent and in control of your stocks, invest in the PSE yourself. You can also have both which is amazing.
Mutual Funds are diversified investments already because the fund is allocated on different securities and money instruments. With stocks, you usually buy shares from a specific company and you can also buy from other companies, thus building your own portfolio.
If you want to easily diversify, go for mutual funds. If you want to have direct ownership from companies, go for stocks.
The higher the risk, the higher the earning potential. Thus, Equity Funds from mutual funds have the highest earning potential compared to the other types of mutual funds like money market, bond fund and balanced funds.
Stocks investment are rewarding as well and gives dividends. In the long run, you’ll grow your investments happily.
Equity Funds and stocks are winners in terms of profit even though they are involved with huge risks.
Share you views about mutual funds vs stocks investments in the comments below. What do you prefer and why?