Investing is the action of buying an asset with the aim of making profits and earning income. Contrary to what many people believe, investing is a long-term activity, while trading is a short-term activity. A successful investor takes a look at the fundamentals of the asset before putting down his money to buy the asset.
We all know that investing in equities is the key to build long-term wealth. The two methods of investing in equities are either directly or indirectly. Direct investment entails purchasing stocks directly, while indirect investment entails investing in mutual funds that in turn invest in stocks. So what is investing and how does the investing in stocks differ from investing in mutual fund? What are the pros and cons of both the options?
Definition of investing: Investing is the action of buying an asset with the aim of making profits and earning income. Contrary to what many people believe, investing is a long-term activity, while trading is a short-term activity. A successful investor takes a look at the fundamentals of the asset before putting down his money to buy the asset.
Differences in investing in stocks vs mutual funds: There are many differences between investing in stocks and mutual funds. Here are the major differences between them.
Pros and cons of both the types of investment: Stocks:
Pros and cons of both the types of investment: Mutual Funds
While both mutual funds and stocks have their own distinct features, it is up to each individual investor to decide where to invest. For those who have time, expertise and money, direct investing can be done. For others, mutual funds are the way to go. In fact, some funds have managed to outperform their benchmark index. However one important point to be noted is that both are long-term investment options.
Rahul Agrawal
Financial Planner
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