Today we are going to talk about why we should start our investment with mutual funds before stocks. The public likes to know the difference between mutual funds and stock market investments as it has recently become a trending topic on the Internet. So, in this article, our readers can find the complete information about mutual funds, and not only that, we are also going to tell the difference between mutual funds and stock market investment as the public searches about it. So, keep reading the article to know more.
Why should investors start with mutual funds?
There is no shortage of people hoping to profit from the stock market. Both novice and experienced investors who demonstrate their stock picking and investment acumen are welcome to participate in the Indian stock market. The number of Demat accounts increased by 34% in December 2022, according to statistics released by Motilal Oswal Financial Services in January 2023. This is a sharp increase in the number of accounts opened by stock market investors in the previous year. Although the data does not show an exponential increase in the number of mutual fund holdings, the number of holdings has increased.
The statistics between mutual fund portfolio and demat account do not correlate, but behavioral data indicates that new age investors often jump straight into equity investments without considering mutual fund investments. Many stock market investors, particularly those who hope to quickly profit from market volatility, often doubt the viability of investing in mutual funds as a source of income. Many have questioned the logic of using mutual funds, or a portfolio of mutual funds, in financial planning when the goal is to generate wealth through investments in existing stocks.
Being able to do your own research and understand the companies you are investing in is essential to becoming a successful independent stock investor. This includes reviewing news, reviewing analyst reports, and examining financial statements. It also means keeping a close eye on the stock market every day. Investing in the modern world prioritizes skills development and career advancement to have a meaningful impact at work. At this point in life, investing directly in stocks could be a big distraction from work because stock research requires a lot of reading and continuous market watching. Investing in mutual funds is not easy, especially for people who don’t know how to set financial goals or what their risk tolerance is. Furthermore, the complexity is compounded by the fact that asset management companies (AMCs) publish new fund offerings in different categories.
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Source: vtt.edu.vn