Doctor can understand their own ailments and can treat themselves. Plumbers can fix water leaks at their own houses and carpenters can easily make wooden articles for themselves. Similarly, skilled finance professionals understand stock markets better to make winning trades and investments. All of us want to try (or have tried) our hands at direct stock investing, but few of us really build a track record. Wealth creation through direct equity investing requires patience and skill. Choosing the right stock requires you to carefully study the company performance, the macro factors, watch out for news in the market, undertake technical and fundamental analysis – all of which require skill, time and effort. The average investor would be unlikely to have either.
Mutual funds adopt a different approach. The investor transfers the money to be invested to the fund-house, and the fund manager invests and monitors everything related to investments. With professional degrees, experience and a constant learning ecosystem around them, mutual fund experts can be pretty successful in generating returns on behalf of investors. Over the long term, many mutual funds have given superior returns annually. Apply now to invest in mutual funds with Standard Chartered. Hence, mutual funds appear as a good solution for most people who don’t have time and skill at their disposal.
For the successful direct stock investor, a 20 percent return annually may look small. This is because the stock market can give you multifold returns in a year if things go your way. But the probability of making superlative returns is minuscule and is also accompanied by the risk of booking losses en route. Trading in stocks requires an understanding of how the stock market works, how trades happen during specified market hours and lots of time.
In mutual funds, all of this is taken care of by the fund manager. Moreover, the fund manager doesn’t invest your money in one or two stocks. They build a portfolio of over 20-50 stocks. This lowers the risk of investing, which means that the impact from the decline in a single stock is reduced. With a Systematic Investment Plan, which allows you to invest regularly, mutual fund plans will give you the benefit of rupee cost averaging and compound your investment over a 5-10 year period. All of this happens in a mutual fund with the investor spending only a few minutesto do the transaction, and there is no need to be a trading expert. Click here to learn about the many benefits of SIP.
If you need incisive and actionable market insights, Standard Chartered’s market views can be accessed on-the-go. You can put this information to use for any of your investing needs. However, if you have a busy work-life, it may be better for you to start your investment journey through our online mutual funds^ platform. Once you gain some confidence as an MF investor, you can always open a 3-in-1 account** later to start learning the ropes of direct equity investments.
As a beginner, mutual funds are a better bet if you wish to partake in the stock market but do not have the time and expertise to pick and choose individual stocks. You can use online mutual fund^ platform to get fund ideas, and smoothly conduct the transaction as and when you want.