I’ll be talking about equity funds Vs. stock market ..coz debt funds are something different altogether ..so.. what do equity funds do ? They invest the pool of money they have in their control in equities .. and have the purpose of giving back maximum returns ..
Good points of mutual funds are :
professionally managed .. monitered constantly.
minimize risk ( by diversifying )
tax benifits are there too ( don’t know the details )
Sectoral funds are there too if you want to invest in certain sector.
Bad points :
Entry load / Exit load ( it’s the % amount they cut from your investment ) .. not always there though ..
May not give you as much returns as you would want ..
Redemption / Investment process is a bit slow .. ( but not after you have a portfolio with some MF )
now about stocks :
- Very high returns ARE possible .. but you need to be alert about when to SELL and when to BUY .
( eg. Maruti’s stock gained over 70 rupees in ONE day ! )
Very high LOSSES are also possible .. since high returns are always DUE to high risk taken ..
Need alertness about the market
One last thing .. as the market is currently having a bull run .. investing in any Equity fund would be good .. ( even the laggards in this category have made upto 20% in last few months !!! ) ..