Is It Always Less Risky To Invest In Stock Mutual Funds Than Directly In Stocks?

By Grace

Which is better? Invest money in stock mutual funds or invest directly in the stock market by yourself? Which is risky?

When it comes to investing in mutual funds and stock market, we always ask ourselves about the risks accompanies with them. A reader of InvestmentTotal.com asked a question;

It’s been few months ago when I read your post about investing in mutual funds and stock market. Here in our country, I want to invest in stocks mutual funds and at the same time I want to have my own stock portfolio to manage by my own. Which is better, to invest in mutual funds equity type alone or do I really need to invest in the stock market by myself? I need your answer ASAP. God bless! — Jason Vee

Invest In Stock Mutual Funds

If you invest in stock mutual funds, your investment are already diversified especially when you invest in different mutual fund companies that manage equity funds. Imagine if there are 2 or 3 fund managers who are investing in the stock market for you. The fund managers carefully select the stocks to buy so that the fund will perform better.

Hint: Diversification can be done easily by investing in mutual funds.

If You Invest Directly in Stocks

If you invest directly in stocks, it will become more profitable. In mutual funds, there are sales loads and other fees to consider. You can save money from those fees if you will invest directly in stocks. However, it is not easy to choose the good stocks to buy and it is not easy to decide whether or not to sell or to buy another stocks.

Hint: If you can’t perform stock market analysis, or you are afraid to invest in stock market, buy a mutual fund equity type. But, if you really want to start investing in stocks, just have more time to learn and educate yourself about stock market investing.

The answer to the question of Jason “Is It Always Less Risky To Invest In Stock Mutual Funds Than Directly In Stocks?” is:

To invest in stock mutual funds and direct stocks are both risky. However, when it comes to minimizing the risks, mutual funds really wins because the funds was already diversified.

Let me ask other investors which one do they prefer? Do they prefer to invest in stock mutual funds (equity type) or do they invest on their own in the stock market. Share your comment.

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