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Community User Posted on 11:46am 21-Dec-2019

How is investment in mutual funds different from direct investment in financial instruments like shares, bonds, etc.?

Mutual fund investing is quite simple and easy in comparison to investing in securities directly. Direct equity investment could be rewarding for those who have good knowledge about the markets and can devote time in choosing and monitoring the securities. If you don’t have the knowledge or time to manage your investment, you can choose the mutual fund where your fund will be managed by a professional fund manager. Mutual funds will purchase the securities as per the predefined objective and continuously monitored and reviewed by the fund manager.

Following are the major differences between direct stock investment and mutual fund investment.

 

Feature

Direct Stock

Mutual Fund

Control on stock selection

Yes

No, done by fund manager

Buy and sell of individual stock

Yes

No, done by fund manager

Portfolio Creation

Yes

No, done by fund manager

Tax Saving

No

Yes, Possible through selected funds

Review and monitoring of individual stock required

Yes

No, will take care by fund manager

Specialized knowledge of the market is required

Yes

No, the fund manager will manage all activities

 

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