Gone are the days when investment was limited to those with a high investment capital. With new investment assets and options popping up every day, the common people have been able to invest actively in the Indian financial markets.
Mutual funds and stocks are two of the most preferred investment options by investors in India. Nowadays, when almost every other thing is available on easy monthly installments, investments are no different. Investment in mutual fund can be done in easy monthly installments instead of investing lumpsum amount. These installments are known as SIP or Systematic Investment Plan. People usually invest a part of their income in these funds through the SIP route and accumulate enough capital for investing in stocks or for fulfilling future goals.
On the other hand, stocks are one of the most sough after platform for investments which has bee attracting investors for long. There has been a misconception amongst people that inversing in stocks require huge capital, but that is not the case. Investors can invest in stocks by making regular small contributions.
Today, we will take a look at investments in SIP and investments in stock and try to figure out which one of these will suit your needs the most.
Table of Content
SIP in Mutual Fund vs Stocks
SIP in Mutual Funds
Mutual funds investments are widely preferred by the millennials and Gen Z given the fact that they provide ease of investments. Mutual funds collect money from investors and invest it on your behalf in different asset classes. Mutual funds have a fund manager, who manages and plans the investment. Now, mutual funds have two options for investing, either you invest lumpsum amount or you make small regular contributions. The later one is known as a Systematic Investment Plan or SIP.
Mutual funds are recommended for investors who do not have enough time to track market movements. However, investing in mutual fund is accompanies by certain charges as well. Investment in mutual fund is also prone to risk. Depending on the fund, a mutual fund can be affected by systematic and unsystematic risks.
Investing in Stocks
Stocks have always been the preferred choice of most investors given the fact that they have great inflation beating capability. However, investing in stocks require market knowledge and research for taking investment decisions. Stocks have inflation beating power over long-term which makes them a preferred choice of investment. However, investing in stocks is also accompanies by various risks depending on your investment.
When you invest in stocks, you do not have a fund manager like mutual funds to guide you, however you can take the help of an investment advisor who can help you with your investments by providing research based trade recommendations.
Conclusion
Whether you invest in mutual funds or stocks, your investment is always subject to risk and reward both. Therefore, it is recommended to have your risk profile evaluated by a certified investment advisor before you plan any investment. A risk profile evaluation provides you an idea about the amount of risk you are capable of taking in the market.
Happy Investing!
