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Invest in Stock Market or Mutual Fund
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As Compared to Mutual Fund Investing
Decision to invest in either stock market or mutual fund can be tough if you are new to investing world.
However, you should know by now that each is unique by itself taking advantage of both investment options is the best thing you should do. Hopefully, these simple investing tips can guide you to which investment option you should start first.
Financial Literacy
Stock Market
It takes technical knowledge, actual experience and investing skills to invest in stock market successfully. Sometimes, you need to find your own investing niche that is so special about your strategy than anyone else to be continuously making money even in falling market.
For example, picking good stocks can be different if you use fundamental analysis approach than technical analysis, or even both. Things get even more complicated to decide when to sell the stocks. Unless you know how to do it all by yourself, better don’t invest in stock market.
Mutual Fund
Unlike invest in stock market, buying mutual funds that perform is much easier and require less financial knowledge. You don’t have to know how to read annual report, how to analyse the stock trading chart or even how to choose the best online stock broker.
In mutual fund investing, research on who is the fund manager, how did the fund manager had performed in the past, what is the fund’s rating and realize all the embedded as well as other hidden cost is good enough for you to choose one that fits your investment goals. Nothing much, really.
Time Commitment
Stock Market
Invest in stock market is not as easy as buying any stock and sell it when the price goes up. It is your job to research which stocks worth investing, when is the best time to buy them and which exit strategy to use if you want to see your money grow exponentially, no one else.
Bottom line, you need time to research stocks, manage portfolio and monitor prices all by yourself. Besides, it is your duty to keep on learning on how to make the most profits from time to time, especially if you are just about to start. These will reduce your risk of losing money significantly.
Mutual Fund
On the other hand, mutual fund investing requires less time commitment since everything is managed by fund managers and the team. The affordable management fees and other administrative cost can somehow made mutual fund investing options viable.
Since we are living in effective and efficient communities, it is not a bad idea to leave the investment decision to the professionals and continue doing things that we do best. After all, this is the whole concept of outsourcing job right? So make sure you choose the right and trusted people then!
Amount of Money
Stock Market
The biggest mistake that most beginners do is buying stocks because they think $500 life savings is good enough to get started. The truth is, you cannot apply proper risk management from just $500. In fact, most novice investors lose everything and went broke right after the first few trades.
Therefore, it is advisable to invest in something that you can afford to lose first; simply because, the chances are you’ll be losing money for the first ten trades. In fact, for successful stock trading, you need a minimum of $30,000 capital to get started for better portfolio management and risk distribution.
Mutual Fund
The same might not hold true for mutual fund investing.
Moreover, invest in mutual fund require less capital as the money is well diversified already.
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Additional Reading
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