MF vs direct investment in Equity

[Zak]

Hi friends,

A few questions:

1. What are the advantages in directly investing in the stock market versus investing in Mutual funds?

2. Are Mf investments mainly for people who want to take less risk?

3. Are MFs mainly for people who do not have time and inclination to research companies?

Thanks in advance.

Regards,
Zak

 

[Zak]

Hi again,

This is probably a very basic question, but if any of the seniors could answer it would be much appreciated.

Thanks!

 

[nikrod]

Hi friends,

A few questions:

1. What are the advantages in directly investing in the stock market versus investing in Mutual funds?

2. Are Mf investments mainly for people who want to take less risk?

3. Are MFs mainly for people who do not have time and inclination to research companies?

Thanks in advance.

Regards,
Zak

Your 3rd point is right. Of cource MF's have other advantages as well, but people who do not understand markets or have no time to take efforts for researching stocks should ideally go for MF's.

 

[Zak]

Thanks for your reply! May I know what the other benefits are, in your opinion? I read somewhere that MF's don't always outperform the market.

Thanks.

 

[nikrod]

Thanks for your reply! May I know what the other benefits are, in your opinion?

Other advantages include profession management and research, diversification accross sectors, tax efficiency (in case of debt funds), flexibility to invest small amounts regularly etc. etc.

If you want more information, refer to learning sections of ValueResearchOnline.com and Moneycontrol.com

I read somewhere that MF's don't always outperform the market.

Yes that is the case with 80-90% MF schemes in developed markets. India is still an emerging market and many Indian MF's have outperformed the indexes till now. Ofcource sometime down the line we will be developed market and hence possess it's characteristics.

 

[Zak]

Thanks for the info and the link! Most useful.

 

[rvm123]

Direct investing is like a sole proprietorship and mf is like a company. In direct investing, the investor can invest depending on his capacity; full profit / loss is for him; all decisions are to be taken by him. In mf, the money of individuals will be pooled together and willbe invested on their behalf by the mf agency; profit / loss also will be managed by them only; if they feel necessary, they will declare dividend; otherwise NAV will be going up; all the decisions will be taken by the managers of the mf

 

[Zak]

Thanks for your input!