Equity Investments:
Pro:
- You have direct control over your investment & portfolio
- Start independent stock picking
- Get into multi-bagger stock
- Can create aggressive / concentrated portfolio
- Get equity ownership & the right to participate in AGM
- High risk - high reward
Cons:
- Required in-depth research, time & skillset
- understand future business prospects thoroughly
- Need technical and/or fundamental qualified
- Stock picking is more of an art rather than a science
- Timing is equally important when to buy & sell
- One wrong call can deteriorate overall portfolio performance drastically
- Should be alert & watch the market on a daily basis
- Riskier than MF investment
- Need a large amount to invest
- Demat is mandatory
- Comparatively more volatile than MF
- Not suitable for conservation, senior citizen or first-time investor
Mutual funds Investments:
Pro:
- Get professional fund management
- Convenient & simple to invest
- Transparency
- Flexibility
- Tax benefit u/s 80C under ELSS
- Easily liquidate
- The economy of scale & minimum transaction cost
- Proper diversification & asset allocation
- Can do saving to investing
- Start with a small lump sum amount & can do SIP
- Demat is not mandatory
- MF follows certain investment strategy, process & system
- Comparatively low risk than direct equity investment
- Dully regulated by SEBI
Cons:
- Need to do homework on scheme selection but lessor than stock selection
- No customized portfolio
- No control on picking & holding stock
- One should very clear about their investment time horizon & goal
- Fund Manager non-performance or change in fund management can drag the return
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