Why invest through Mutual Funds & not directly in stocks or bonds?

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We all want to invest in the stock market, but the risk of loss terrifies us, only if we have a research team to back us up or professional people who have many years of market experience- yes that’s what you get when you invest in the mutual fund. We have the option to invest in the same stock market, either directly or through a Mutual fund. So, in this article, we will talk about why investing in the stock market through a Mutual Fund is better than directly investing in stocks or bonds.

What are Mutual Funds?
Mutual Fund, is one of the buzzing investment options. It is a kind of investment option where money from various investors is pooled in together and then invested in securities such as stocks and bonds. There are 3 basic options of investment under mutual funds- equity, debt, and hybrid. Also, you have more options in these funds, you can invest based on sectors, the market capitalization of companies, etc. These options make the mutual fund a preferred option from customers, also there are other added advantages such as low risk, professional management, and good returns.

Advantages of investing through mutual funds instead of directly investing?
1. Professional management- if you go through a mutual fund one of the biggest advantages that you have is professional management. Your money is invested by professionals who have market experience, also they have research teams to back their investment decision. overall money is cautiously invested and your money is safe. Also while purchasing bonds they do complete research about the company and then invest the money, ensuring none of the investments turn into bad debts.

2. Diversification- when you invest in the stock market or bonds, you would probably buy 2-8 stocks, not any more than that. But when you invest through Mutual Funds your investment is diversified in 80-100 companies, this makes your investment safer, reduces the chances of risk, and increases the returns. Also, when you invest in bonds your investment is diversified, in different types of bonds that vary in risk, so your risk is reduced and returns are increased.

3. More Options- When you invest your funds, you don’t have options because of the limited amount. But when you invest through Mutual Funds, you have tons of options, you can invest based on sectors, index funds, etc. which provides you with the option to diversify your investment, you can invest in multiple sectors with a limited amount of funds.

4. Less time-consuming- if you invest through a mutual fund, then you save a lot of time and effort that would be required if you directly invested in stocks. Also, you can start with a low amount if you are investing through a mutual fund, just 100.

Conclusion – Overall Mutual funds are a great option for any one who is looking to invest, they are low risk, provide great returns and require low efforts. All the advantages that it comes with makes it a better option than directly investing in stocks or bonds.

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