Should I Invest in Stocks or Mutual Funds?

Investing in either stocks or mutual funds can be beneficial per time or season putting certain factors into consideration. While some investors would rather pic investing in stocks over mutual funds, it may not necessarily be wise to always pick stocks over mutual funds.

When it comes to either investing in stocks or mutual funds, there are three factors that must be put into consideration. Such as the investor’s risk tolerance, how much time the investor is willing to put into researching both investments, and the type is annual fees involved with each investment. All of these are dependent on the investor’s willingness to count the costs of each investment and go with it.

Stocks vs Mutual Funds

There are many investment vehicles out there – bonds, real estate, money markets, etc.—whichever one an investor decides to choose is totally up to them. Every of these investment vehicles holds its perks and downsides and risky at different levels. It is without a doubt that investing in stocks would fetch an investor plenty of money (if successful!). However, investing in a mutual fund would help you take advantage of available opportunities in the market by pooling your money into a single-vehicle. Plus, investing in mutual funds is a lot safer compared to stocks.

Investing in stocks is far riskier than mutual funds. Mutual funds allow investors to invest in diverse securities including stock by pooling these securities or financial instruments in a fund. By doing this, the investors would reduce risk rates because if an investment in the fund stops performing well it would be offset by other investments in the fund that are performing well. Thus, creating diversification for the investors, unlike stock.

On the other hand, there is a slight chance for mutual funds to out-do the stock of best performers like Amazon(AMZN), Apple (APPL), or Tesla (TSLA). Amazon stock, for example, has experienced a percentage increase of 61,600 since 1997. While Vanguard Health Care, one of the best mutual funds, since 2000 has only experienced a 2,247 percentage increase so far. Investing in the stock of these best performers would give the investor a better opportunity at wealth creation.

Benefits of investing in Mutual funds

Just like any other type of investment mutual funds also has its benefits such as splitting investment responsibility amongst a number of investors. The common benefits of investing in mutual funds are:

• Different investors pool money together to provide capital for investment in different securities

• The responsibility and cost of trading is shared among a group of investors investing in a mutual fund

• It encourages diversification of holdings since different securities are involved

• It is a good way for investors to avoid making crucial investment decisions alone

 Benefits of investing in stock

• The investor owns a share of a corporation and makes money through selling shares and/or dividends paid by the corporation.

• Investing in stocks is a sharp approach to wealth building

• The investor owns all financial profits in a stock investment