Why choose Mutual Funds over Equity?

Ever wondered what those sophisticated people with a suit and tie talk about on the news. All the haste about bulls and bears taking over the stock market that we really need to know about. Doesn’t it sound curious that a boy named Warren Buffett of 11 years started to trade in a stock market and 77 years later has a net worth of  $84 billion (as of December 2017)? amber

This is the equity market that fascinates and terrifies us at the same time. The true secret to any investment is patience. Imagine you want to have a pizza. Now in a stock market, the investor gets it done like a homemade pizza. He’ll take his time, go purchase all the right ingredients and work on making it on his own. A trader, on the other hand, would just look for immediate returns, like a person who likes the frozen pizza. But for a pizza cooked in a restaurant by a professional, one which took time having all the best topping suited to your liking. That’s a Mutual Fund!

A Mutual Fund is a great way for an investor to participate in the stock market and buy shares with the diversification of his risks. It collects funds from various investors and channels it to various investments based on qualified decisions of a professional fund manager. The risk is diversified and hence is decreased to a minimum, while the returns, on the other hand, is almost equivalent to that of equity trading.

Whereas, equity is the ownership of a business in terms of money. Companies from all over the country come together and sell shares of their business to the public in exchange for money, with which they can run or expand their company. After a while, they earn a substantial amount of profits and distribute these to their shareholders as dividends. The stock exchange has worked to build tremendous amounts of funds for business and also helped many individuals to profit from investing. However, there are a lot of dangers lurking around.

The Stock Market is totally unstable and unpredictable. There are many ways of calculating future values, but no one can anticipate every foreseeable circumstance. To make matters much worse the market is primarily influenced by people’s mindset. So that means, even an upcoming election can hit the stocks hard.

It is vital to the country that many people participate in the stock market. But how can one do so with the fear of losing a huge chunk and with no prior knowledge? The answer was given in 1963 when an initiative by the RBI brought a wonderful world of Mutual Funds. This bold investment vehicle was made accessible to everyone after digitization with apps like the Fisdom app to help budding investors or individuals looking to earn big bucks to invest in Mutual Funds!

Hope this article helped you in differentiating between Mutual Funds and Equity. Remember it is your investments, hence it is advisable that you assess your risk appetite before you make significant decisions regarding your investments.

Think Smart. Think Fisdom !