Photo: iStock
Photo: iStock

Returns in shares are higher than from mutual funds

Though shares have the potential to provide higher returns, lack of knowledge and discipline might result in lower returns than mutual funds

Most great investors are known to have created wealth by investing directly in shares. Their success stories are part of investment folklore.

Shares are always referred as the top wealth creating asset among all assets available. The returns on direct investments in certain stocks could be huge but at the same time some shares might underperform so badly that you might even lose your principal.

Compared to shares, mutual funds are diversified investments in shares. Mutual fund managers deploy our money after careful research and analysis. As individual investors, we might not have the capability nor knowledge to take the right decisions in stock picking.

Hence, though shares have the potential to provide higher returns, lack of knowledge and discipline might result in lower returns than mutual funds. A better understanding of both assets might help in deciding what suits you well.

Steven Fernandes, chief executive officer, Proficient Financial Planners

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