Many investors consider it fascinating to buy direct stocks rather than invest in mutual funds. They consider mutual funds to be boring and stocks to be exciting.
Mostly, they buy stocks based on hearsay and not their own research. Simply knowing a company doesn't mean it is a good investment bet.
Most investors stick to underperforming stocks and exit good stocks.
Most investors are unable to calculate the returns they get on direct stocks over the medium to long term. They use the approximation method in their mind. Mostly, they are over-optimistic about the returns they generate in stocks. Also, they tend to ignore loss-making stocks while calculating their return. They do not like being wrong in their ability to pick the right stocks and so they use their own arguments in favor of their experience in investing in stocks.
It is also time-consuming to invest and manage a direct stock portfolio. At times, it also causes stress.
One can be better off staying with a mutual fund portfolio. It is to be noted that investors are indirectly holding stocks through the mutual fund route.
Some investors can definitely do well as direct stock investors. For most others, mutual fund investing can be rewarding.
Stay simple. Create wealth. Stick to mutual funds.
A blog from Santosh G Akerkar. For Educational and Awareness purposes.
Best Regards,
Santosh Akerkar
