Which one sounds more like you?
“I want substantial returns in xx DAYS / WEEKS / MONTHS”
OR
“It’s okay for me to get substantial returns in xx YEARS.”
A lot of investors, maybe including yourself, always wonder which investment is best for them. Most of the time, investors are left to choose between Mutual Funds or the Stock Market. The truth is, there is no need to choose between these two investment vehicles. Neither is better than the other as both have their own advantages and disadvantages.
So, it all boils down to your persona and your own financial goals. Here are the pros and cons when it comes to investing in the stock market and in mutual funds
Stock Market
| Pros | Cons |
| 1. Your own research on stocks 2. Investments are managed by you; Create your own decisions 3. Low fees 4. Withdraw or deposit anytime 5. Short-Medium term trading 6. Invest in specific stocks | 1. More time consuming compared to Mutual Funds |
Mutual Funds
| Pros | Cons |
| 1. Professionals will do the research for you 2. Investments are managed by Fund Managers; convenient for long term investors 3. Withdraw or deposit anytime 4. Diversified portfolio; Less Risk 5. Not limited to stocks; includes other securities such as bonds, money market, etc. | 1. Higher fees compared to personal investments in the stock market |
Given the pros and cons provided above, it all comes down to which is more suitable to your lifestyle. You can assess yourself by answering the following questions:
- How much time can I allocate on my investments per day?
- How often do I plan to check on my portfolio?
- What is my time-frame in the market? Months? A Year? 5 Years? 10 Years?
It can get complicated to decide which one you want to be invested in. However, it is highly recommended to invest in both the Stock Market and Mutual Funds to diversify your overall portfolios and to meet short-term and long-term goals.
It is advisable to allocate a budget to mutual funds for your long-term retirement portfolio capitalizing on value assets with little to no risk, and also have your own active stock market portfolio to capture capital gains on growth-value stocks in the short to medium term.
