Which one is better for investors point of view ” Mutual funds or Stock Market”
It depend upon the risk bearing capacity of every individual investors , it is not quite possible risk bearing capacity may be same for very investors. both like mutual funds as well as stock market attract investors , now it depend upon them which one they actually prefer.
History of Mutual funds.
The origin was mutual fund financial crisis that staggered Europe in the early 1770s. you can imagine how much history of mutual fund is old. The first modern day mutual fund was created on march 21, 1924 by the Massachusetts and it was the first open ended fund.
The enactment of two British laws, the Joint Stock Companies Acts of 1862 and 1867, permitted investors to share in the profits of an investment enterprise and limited investor liability to the amount of investment capital devoted to the enterprise. Shortly thereafter, in 1868, the Foreign and Colonial Government Trust was formed in London.
THE MUTUAL FUND INDUSTRY IN INDIA
The mutual fund industry was first started in 1963 with the formation of UTI (Unit trust of India) at the initiative of RBI (Reserve bank of India) and Government of India . But then the objective of to attract small investor to make investment. Since now it is broadly divided into six parts like .
- Phase I : Growth Of UTI
- Phase II : Entry of Public Sector Funds
- Phase III : Emergence of Private Funds
- Phase III : Emergence of Private Funds
- Phase V : Emergence of a Large and Uniform Industry
- Phase VI (From 2004 Onwards): Consolidation and Growth
As per my recommendation if you are beginners and did not invested single amount ever before should go through mutual funds, here professional fund managers or veteran stock market experts always active and invest their funds in various sectors instead of single sectors behalf of you. in mutual fund their if you little bit aware about stock market and mutual fund then would be crucial to choose mutual fund.
There are two option available to enter in awesome world of mutual fund.
SIP : ( Systemic investment Plan) in this plan you require to invest a predetermine amount on monthly basic for long periods.
LUMSUM : it is also a mutual fund plan in this way one can invest a lumsum amount for a long period , it does not work on monthly basic but whenever you need may invest .
Mutual fund is really flexible rather then STOCK MARKET , MCX, CURRENCY. so for the beginners the platform of mutual fund really like a stock market trading where all investors can easily observe and look after their funds and returns self. Because beginners at initial stage are unseemly so they should be spook about stock market, if they loose their monies at initial stages then neither they would be invest nor recommend to others to invest. so as per my opinion i would suggest to every beginner investor to prefer mutual funds at first time. Now questions is arises how one can invest in mutual funds.
Popular way to invest in stock market
- Direct Method
- Regular Method
- Direct Method : invest directly through companies site without involvement of broker and third party.
- Regular Method : can be invested by the involvement of third party and some other hidden commission are also included. The returns of both plan are different.
History of Stock Market : The government of india recognized the Bombay stock exchange in 1956 as the first stock exchange of the country under the Securities Contracts (Regulation) Act.
The first organised stock exchange of india was started in 1875 at Bombay and started to be oldest one of Asia region. In 1894 the Ahmedabad Stock Exchange was started to facilitate dealings in the shares of textile mills there. The Calcutta stock exchange was started in 1908 to provide a market for shares of plantations and jute mills . it all are oldest reforms of stock market.
Then Madras stock exchange was also started in 1920, At present there are 24 stock exchanges in India. But two stock exchanges like BSE(Bombay stock exchange ) and NSE (National stock exchange) these two widely and nation wise trading in India
For the beginners mutual funds or stock market:
Beginners means one who never invested ever before in mutual fund as well stock market but now they actually interested. they require to understand every things from initial stage like what is mutual fund, is this right for me or not, what is right time to buy mutual fund or stock all these things play vital role in terms of investing,
For The Experience Player Which one would be better ” Mutual fund or Stock Market”
There is no any doubt in this question…… it is quite true for the experience player best platform is stock market, because they spent huge time and suffer huge losses to understand the concept and momentum of market . to make monies from the stock market tough task comparison to mutual fund , here had to do deep analysis and many more fundamental analysis is needed.
i would like to discuss my own self-experience it was the time before 2 years when i had started investing first time with mutual funds , reason is behind that time i was beginners for investing point of view , so i started with mutual funds but simultaneously i keep learning terminology of stock market , momentum of graph, earning per share, and many vital things.
After continuously investing in mutual funds finally after two years i open demat account and then begain investing in stock market and left the mutual funds ( i would not recommend to you all readers and investors to do this because i had did this, for me i had strong reasons.
A number of experience stock market player deliberately entertain this , they know very well only stock market may make richer earlier than anything else . But it is stigma of our Indian mentality only 3 to 4 percent of Indian population invest in stock market and mutual fund but a handful investor are actively trading.
Number of investing percentage much higher than India if we take example of ” USA, UK, CHINA, AUSTRALIA, . Here almost 50 to 60 percent of overall population keep actively trading, the reason behind the younger of other economically developed countries being taught from their schooling to benefits of investing . so here investing percentage(above mentioned countries) is huge rather then other specially Indian.
Comparison between mutual funds or stock market
- investing in mutual funds is easy but in stock market is the matter of sobriety so invest as per your own decision
- in mutual fund funds is being managed and pooled by professionals but in stock market investors self invest their funds
- in mutual funds there is no need to knowledge of finance but on other hands need handsome knowledge of finance and markets if anxious to invest in stock market
- on annual basic mutual funds may give returns upto 20 to 25 percent maximum ( minimum 15 to 18 percent) but there is no any limit of returns in stock market may give you upto 200 percent, if you choose valuable stocks.
- if amount invested in mutual funds then it pooled various sectors lile power, energy, fmcg, Phrma , bank nifty, papers, but in other hand if amount being invested in stock market would be invested in single sector . (for example if mr x invested 5000 INR in stock market in power sector then whole 5000 will be invested in power sector but such not applicable in mutual funds)
- mutual fund little bit risky but stock market is highly risk
- You also make money from stocks when you sell them. Your profit is the difference between the selling price and your purchase price, minus fees. Stocks trade continuously, and the prices change throughout the day. If the market crashes, you can get out anytime during the trading session. but in mutual funds does not.
- for investing in mutual fund there is no need to have demat account but for stock market trading demat account play vital role .without demat account investing not possible.
Tax applicability on mutual fund as well as stocks
MUTUAL FUND TAX LIABILITY : tax charge on long term investment is much lesser than short term, SIPs are taxable as per the type of mutual fund and the holding period. For instance, you begin an SIP of ₹30000 a month in an equity fund for 12 months. Each individual SIP is considered to be a fresh investment. Hence, after 12 months, if you decide to redeem your entire accumulated corpus (investments plus gains), all your gains will not be tax-free. Only the gains earned on the first SIP would be tax-free because only that investment would have completed one year. The rest of the gains would be subject to short-term capital gains tax.
in case tax applicability if capital gain from selling of shares : MR X purchased shares for Rs.200 on 30th September 2017 and sold them for Rs.250 on 31st December 2018. The Value of the Stock was Rs. 240 as on 31st January 2018. Out of the capital gains of Rs. 50(i.e 250-200), Rs. 40 (i.e 240-200) is not taxable. Rest Rs. 40 is taxable as Capital gains @ 10% without indexation.